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Archive for September, 2008

The Panic of ’08

I’ve been resisting commenting on the financial crisis, wanting to have a better understanding before saying anything. But last night’s debate frustrated me; John McCain let Obama get away with alleging that the problem was a lack of regulation, when in fact it was a combination of government directives and cronyism on the part of Congressional Democrats. Power Line offers a video that does an excellent job of explaining the genesis of the crisis. Virginia Postrel has insightful remarks:

INSOLVENT OR ILLIQUID?
Contrary to widespread popular belief, the “$700 billion bailout” doesn’t involve spending $700 billion, since most subprime mortgages are still OK. They aren’t all going to default. The problem is that once they’ve been sold and chopped up into derivative securities, the good mortgages are hard to identify and untangle from the bad ones. If we knew which were which, we could also separate financial institutions into two categories: those that are truly insolvent and those that are simply in a cash crunch caused by uncertainty and panic.

Good policy should seek to help illiquid firms survive the immediate crunch while forcing the insolvent ones to restructure their debts and essentially (or literally) declare bankruptcy–the sooner, the better. My general inclination is to put policy emphasis on helping healthy firms rather than bailing out losers, including homeowners who can’t make their payments.

She also has ideas about how to address the crisis:

For starters, any lending should follow the wise Allan Meltzer’s Chilean example of requiring firms to cancel their dividends as a condition of any assistance–a proposal that also has the positive effect of generating cash. (Meltzer, one of those people a lot smarter than I am, doesn’t think the government should do anything.)

Second, all assistance should be structured so that it is potentially profitable to the Treasury and–equally important–those profits should be rebated to taxpayers, not thrown into the general federal pot. If, as Andy Kessler suggests, the Treasury stands to make a fortune by becoming a sort of hedge fund, the fund’s “investors” ought to reap the gain directly.

Third, and this will take a while, serious thought needs to be given to creating automatic circuit breakers of various sorts to prevent this sort of contagion in the future.

Last but definitely not least, Fannie and Freddie must go. They not only privatize reward and socialize risk. They do so by design. The whole point of these agencies is to put taxpayers on the hook for mortgage risks that private actors wouldn’t take without them.

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Debate Before the Debate

Twenty-four hours before McCain and Obama faced off, Daniel Bonevac and James Galbraith debated before a crowd of about 4,000 at the University of Texas at Austin (video streaming here, though I can’t seem to make it work on this computer).

Stephen Green drunkblogged the actual McCain-Obama debate.  He sums up Obama’s strategy for dealing with Iran:

I wave papers in your general direction, you Persian sons of hamsters!

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New Spam?

From Quid Nimis:

DEAR AMERICAN:

I NEED TO ASK YOU TO SUPPORT AN URGENT SECRET BUSINESS RELATIONSHIP WITH A TRANSFER OF FUNDS OF GREAT MAGNITUDE.


I AM MINISTRY OF THE TREASURY OF THE REPUBLIC OF AMERICA. MY COUNTRY HAS HAD CRISIS THAT HAS CAUSED THE NEED FOR LARGE TRANSFER OF FUNDS OF 800 BILLION DOLLARS US. IF YOU WOULD ASSIST ME IN THIS TRANSFER, IT WOULD BE MOST PROFITABLE TO YOU.

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Religion and Reason

Ever since the Enlightenment, a standard line has been that religion is irrational; if only we could get rid of it, rationality would reign. Recent studies cast doubt on that view:

From Hollywood to the academy, nonbelievers are convinced that a decline in traditional religious belief would lead to a smarter, more scientifically literate and even more civilized populace.

The reality is that the New Atheist campaign, by discouraging religion, won’t create a new group of intelligent, skeptical, enlightened beings. Far from it: It might actually encourage new levels of mass superstition. And that’s not a conclusion to take on faith — it’s what the empirical data tell us.

“What Americans Really Believe,” a comprehensive new study released by Baylor University yesterday, shows that traditional Christian religion greatly decreases belief in everything from the efficacy of palm readers to the usefulness of astrology. It also shows that the irreligious and the members of more liberal Protestant denominations, far from being resistant to superstition, tend to be much more likely to believe in the paranormal and in pseudoscience than evangelical Christians.

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Here’s the speech Sarah Palin wasn’t allowed to give yesterday—and a powerful speech it is.

Caroline Glick reacts.

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Stanley Kurtz has been digging through the files. Obama and Ayers worked closely together to radicalize Chicago schools, rejecting grant applications for programs to improve math and science education and pushing “small schools” dedicated to oppression studies and political activism.

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The Stealth Campaign

Wow. My Pet Jawa lays out evidence that a public relations firm working for the Obama campaign created and spread, through “astroturfing”—professionally produced YouTube videos and comment sockpuppetry—smears against Sarah Palin. Suddenly, the accounts have disappeared, and someone is trying to hide tracks. There’s strong evidence here, not only of dirty tricks, but of violation of campaign laws.

Here’s the summary. But take the time to read the entire report. It’s essential to understanding the current campaign and, more generally, the current state of our politics.

Extensive research was conducted by the Jawa Report to determine the source of smears directed toward Republican Vice Presidential candidate Sarah Palin. Those smears included false allegations that she belonged to a secessionist political party and that she has radical anti-American views.

Our research suggests that a subdivision of one of the largest public relations firms in the world most likely started and promulgated rumors about Sarah Palin that were known to be false. These rumors were spread in a surreptitious manner to avoid exposure.

It is also likely that the PR firm was paid by outside sources to run the smear campaign. While not conclusive, evidence suggests a link to the Barack Obama campaign. Namely:

  • Evidence suggests that a YouTube video with false claims about Palin was uploaded and promoted by members of a professional PR firm.
  • The family that runs the PR firm has extensive ties to the Democratic Party, the netroots, and are staunch Obama supporters.
  • Evidence suggests that the firm engaged in a concerted effort to distribute the video in such a way that it would appear to have gone viral on its own. Yet this effort took place on company time.
  • Evidence suggests that these distribution efforts included actions by at least one employee of the firm who is unconnected with the family running the company.
  • The voice-over artist used in this supposedly amateur video is a professional.
  • This same voice-over artist has worked extensively with David Axelrod’s firm, which has a history of engaging in phony grassroots efforts, otherwise known as “astroturfing.”
  • David Axelrod is Barack Obama’s chief media strategist.
  • The same voice-over artist has worked directly for the Barack Obama campaign.

This suggests that false rumors and outright lies about Sarah Palin and John McCain being spread on the internet are being orchestrated by political partisans and are not an organic grassroots phenomenon led by the left wing fringe.

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Is Congress Irrelevant?

“Congress today is fundamentally a silly place stocked with silly people.” Sounds right to me.

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This week a bipartisan group of Senators introduced a resolution “recognizing the strategic success of the troop surge in Iraq” that “commends and expresses the gratitude to the men and women of the United States Armed Forces for the service, sacrifices, and heroism that made the success of the troop surge in Iraq possible.” Of course, the Democratic leadership was in opposition. Democratic Senate Majority Leader Harry Reid and Armed Services Chairman Carl Levin blocked a vote on it. The Wall Street Journal explains:

The reality is that success in Iraq has confounded the political left, which placed a huge political bet on our defeat. Senator Reid famously declared the war lost in April 2007. Joe Biden introduced a resolution opposing the surge. And Hillary Clinton said the reports of progress in Iraq required “a willing suspension of disbelief.” In the Democratic narrative, our troops in Iraq are victims of a lost cause, not heroes. They’re allowed to get maimed and killed, but not to succeed.

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Francis Beckwith and Meryl Yourish have details on how the Democrats have played hardball to prevent Sarah Palin from showing up at a protest of Iran. I like David Bernstein‘s comment best:

Let me get this straight: if the only prominent American politician to attend a rally against Iran is Hillary Clinton, the rally is a neutral, nonpartisan event. If Hillary Clinton AND Sarah Palin attend, then the rally becomes a partisan political event, and Clinton couldn’t possibly agree to appear. Very, very strange.

UPDATE: A reader comments: What’s the difference between [Malcolm] Hoenlein [who invited Palin, and then disinvited her under pressure from Democratic activists] and Ahmadinejad?

Ahmadinejad isn’t intimidated by the Democrats.

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