You seem to have a rather charming scenario in mind, with you playing the role of a little lost child, and the lottery machine playing the role of parent, diligently searching for you. This is called a “rendezvous problem”, and, in general, you would be better off staying where you are and letting the lottery machine find you.
With almost 14 million combinations to try, this would take, on average, seven million attempts – about 67,000 years if you play twice a week. Success would be guaranteed after 135,000 years. If you choose your numbers at random, however, success is never guaranteed, and tame mathematicians tell me that the average time to strike lucky is also longer – perhaps 100,000 years or so....
In case you are not a long-time reader, I will repeat my advice as to how to enjoy the thrill of the lottery without the fool’s bet. Choose your numbers, but don’t buy a ticket. You’ll win almost every week – the fear that your number might actually come up is an adrenaline rush to beat them all.
Friday, February 27, 2009
President Obama promised a middle class tax cut but what he didn’t tell us was that he would pay for it with a climate tax,” said Corker. “His budget will generate $645 billion through a climate tax and use that revenue to fund various programs outlined in budget. I guess his claim on Tuesday night that no one earning under $250,000 would pay more in taxes did not apply to this massive climate tax increase all Americans will pay.
[President Obama's] disapproval rating is a bit higher than average (24 versus 16 percent).
The least popular president one month in: Ronald Reagan (55 percent).
The most popular president one month in: Jimmy Carter (71 percent).
At 304 Spring Street, a sleek condominium building in SoHo with stunning Hudson River views, the buyer for the duplex penthouse recently decided he would not go through with the deal and walked away from a $780,000 deposit.
At 1120 Park Avenue, a classic prewar co-op filled with multimillion-dollar apartments, it appears that a buyer forfeited a deposit of as much as $1.1 million.
Real estate agents representing buyers of at least three other multimillion-dollar properties also report clients who knowingly left deposits of more than $1 million or hundreds of thousands of dollars on the table.
In each case, the buyers had signed their contracts before the financial meltdown last fall, but decided in recent months that because values in the luxury real estate market have dropped 20 to 40 percent, it no longer made sense to go through with their deals.
[Capping CEO pay] is like rewarding the arsonists and capping the firemen.--Carl Quintanilla
If you spend lots of your budget on "luxuries" -- especially durables -- it is easy to postpone their consumption. This might cause GDP to fall more rapidly than if people were poorer.--Tyler Cowen
Stimulus is not spending; it's deficit. If Bush had delivered a budget in rough balance, Obama would have had to borrow up to the current deficit to get the stimulus he desires. Given that more recent debt is always much more expensive than older debt (that's the magic of inflation, kids!), when taxes are finally raised, they will pay more for spending on Obama's watch than on Bush's.--Megan McArdle
Every president who inherits a deficit promises to cut it somewhere down the road. Only one president in recent years has kept that promise — Bill Clinton. But he was helped by six years of Republicans in the House and Senate. When the White House and the Congress are from the same party, it's very hard to say no to key constituencies that expect rewards for past support. If Obama is really serious about cutting the deficit down the road, he will almost certainly have to fight with his own party.--Russell Roberts
In this era in which [President Obama] wants us all to be accountable, is he accountable for his language, let alone his actions? How can he talk about fiscal responsibility when he has just signed a bill proposing a huge increase in the deficit and now is pushing another bill to increase the deficit even more?--David Henderson
Thursday, February 26, 2009
[Taleb] wants to nationalize "the utility part of banking," whatever that is, without specifying how government control would offer a better solution, rather than just an opening for the intrusion of politics into the relatively less compromised world of finance. Where would we draw the line around "utility" finance: commercial lending, retail lending, residential lending, commercial real estate lending, leveraged finance, asset-backed lending, securities underwriting, securities trading, insurance? How could we prevent contagion from the unnationalized bits—where, presumably, private banks would be free to succeed and fail relatively unconstrained—back to the nationalized ones? At what cost in efficiency, the price of money, political interference?
Those private individuals who commit their capital to the pursuit of risky returns, investors, pay taxes on their gains (at least most of the time). When they make money, we taxpayers benefit, and when they lose money, we taxpayers suffer, even if we are not investors ourselves. It is willfully shortsighted to deny that we already have an extremely robust, multifaceted system in this country for socializing both gains and losses from the activities of private capital. (Jobs, anyone?) It is appallingly disingenuous to assert that investment and commercial banks were the only entities which benefited from the multi-year credit bubble, and therefore should suffer disproportionately. And it is laughably ludicrous to compare military and security personnel—much less Roman legionnaires—to finance professionals. For the same reason I do not want to pay soldiers for the number of enemies they kill and security personnel for the number of threats they forestall, I do not want to pay a commercial banker for the number of loans he declines.
It is the height of epistemic arrogance to claim otherwise.
Back to the drawing board, Nassim.
I'm thinking that Taleb and Marx (Karl, not Groucho) have something in common. Their respective critiques of popular morays were amazingly perceptive; but their prescriptions made things even worse.
Tuesday, February 24, 2009
Well, how about a new form of Treasury bond — say, "Social Security Retirement Bonds" — backed by the full faith and credit of the US government? They would become our own personal property, not redeemable until retirement age, not transferrable, void upon the death of the holder, and structured such that the timing of redemptions wouldn't change the projected cost of the social security system by a single dollar. The stock market wouldn't be an option; SS funds would be fixed in the form of new, nontransferrable government bonds with our names on them.
With a properly-designed SS bond program, the only difference would be this: the promises politicians have made would merely become our personal property, backed by the full faith and credit of the US government. Like the Treasury bonds now held by the Chinese, they would be secure from the whims of future US politicians.
When I was a freshman in college, I was assigned “Reflections on the Revolution in France” by Edmund Burke. I loathed the book. Burke argued that each individual’s private stock of reason is small and that political decisions should be guided by the accumulated wisdom of the ages. Change is necessary, Burke continued, but it should be gradual, not disruptive. For a young democratic socialist, hoping to help begin the world anew, this seemed like a reactionary retreat into passivity.
Over the years, I have come to see that Burke had a point. The political history of the 20th century is the history of social-engineering projects executed by well-intentioned people that began well and ended badly. There were big errors like communism, but also lesser ones, like a Vietnam War designed by the best and the brightest, urban renewal efforts that decimated neighborhoods, welfare policies that had the unintended effect of weakening families and development programs that left a string of white elephant projects across the world.
These experiences drove me toward the crooked timber school of public philosophy: Michael Oakeshott, Isaiah Berlin, Edward Banfield, Reinhold Niebuhr, Friedrich Hayek, Clinton Rossiter and George Orwell. These writers — some left, some right — had a sense of epistemological modesty. They knew how little we can know. They understood that we are strangers to ourselves and society is an immeasurably complex organism. They tended to be skeptical of technocratic, rationalist planning and suspicious of schemes to reorganize society from the top down....
I worry that we’re operating far beyond our economic knowledge. Every time the administration releases an initiative, I read 20 different economists with 20 different opinions. I worry that we lack the political structures to regain fiscal control. Deficits are exploding, and the president clearly wants to restrain them. But there’s no evidence that Democrats and Republicans in Congress have the courage or the mutual trust required to share the blame when taxes have to rise and benefits have to be cut.
All in all, I can see why the markets are nervous and dropping. And it’s also clear that we’re on the cusp of the biggest political experiment of our lifetimes. If Obama is mostly successful, then the epistemological skepticism natural to conservatives will have been discredited. We will know that highly trained government experts are capable of quickly designing and executing top-down transformational change. If they mostly fail, then liberalism will suffer a grievous blow, and conservatives will be called upon to restore order and sanity.
It’ll be interesting to see who’s right. But I can’t even root for my own vindication. The costs are too high. I have to go to the keyboard each morning hoping Barack Obama is going to prove me wrong.
Bankers securitizing mortgages knew that their models were highly sensitive to house-price appreciation. If it ever turned negative on a national scale, a lot of bonds that had been rated triple-A, or risk-free, by copula-powered computer models would blow up. But no one was willing to stop the creation of CDOs, and the big investment banks happily kept on building more, drawing their correlation data from a period when real estate only went up.
A fund of hedge funds run by two members of Vice President Joe Biden's family was marketed exclusively by companies controlled by Texas financier R. Allen Stanford, who is facing Securities and Exchange Commission accusations of engaging in an $8 billion fraud.
There's nothing more permanent than a temporary government program.--Milton Friedman
Give me six hours to chop down a tree and I will spend the first four sharpening the axe.--Abraham Lincoln
[Drew Bledsoe] was the player who showed me how to really be unselfish and put the team first.--Tedy Bruschi
While I have no data to support this, I suggest that one of the things the market is suffering from right now is what I would call the "hopelessness of audacity." I would prefer from our leaders less audacity and more hope.--Larry Ribstein
I should mention that I think that atheists are susceptible to state-worship. As a result, the disposition to believe in the supernatural gets exploited by politicians.--Arnold Kling
Monday, February 23, 2009
Investigators are trying to staunch a flood of Medicaid scams bleeding New York dry, including bills for unneeded prosthetic eyeballs, services for patients long dead and prenatal care - for men.
Social Security scheme post here.
1) Intrade beats 2008 election prediction winner Nate Silver in Oscars
2) and HubDub beats Intrade
UPDATE: Panos Ipeirotis begs to differ on HubDub's claim of victory over Intrade, citing respective confidences.
... we're running out of rich people--Rep. Michele Bachmann
TARP investments are certainly “troubled.” And Washington, it turns out, isn’t the best short-term investor.--Zachary Kouwe
Most of us don't give money to strangers without good reason. Hell, my parents wouldn't give me the kind of no-questions-asked-no-strings-attached help that this implies they, as taxpayers, should help extend to hundreds of thousands of other peoples' children. Which may be why I don't need it.--Megan McArdle
What good comes from your Press Secretary attacking CNBC’s Rick Santelli? It makes the White House look weak and out of touch with the markets.--Evan Newmark
The early press reaction asks why the White House would give Santelli free publicity and elevate him to Official status? Easy: they'd rather the opposition be identified with Santelli and stock brokers than with, say, a Joe the Plumber type (but who actually is a plumber and who has serious real reservations about the mortgage plan).--Marc Ambinder
We need to avoid reckless short-term swings in policy. Massive deficits and zero interest rates might temporarily perk up spending but at the risk of a collapsing currency, loss of confidence in the government and growing anxieties about the government’s ability to pay its debts. That outcome could frustrate rather than speed the recovery of private consumption and investment. Deficit spending in a recession makes sense, but the deficits should remain limited (less than 5 percent of GNP) and our interest rates should be kept far enough above zero to avoid wild future swings.--Jeffrey Sachs
Friday, February 20, 2009
Via Tony Woodlief, Ross McKitrick and Bruce D. McCullough uncover fraudulent data manipulation on the part of academics in driving policies. Cases include:
This is why I believe prediction markets are important--they inform policy and can offset institutional bias of the greatest order.
Federal Reserve Bank of Boston on mortgage lending
A 1992 study by economists at the Federal Reserve Bank of Boston purported to show a widespread discrimination against minorities in the Boston mortgage market. This study quickly became the basis for government mandates to relax lending rules, allowing people who did not meet traditional lending requirements to obtain mortgages. This ultimately contributed to the current U.S. financial crisis.
When independent researchers attempted to replicate the study, the underlying data were inaccessible. Key information was eventually obtained using the Freedom of Information Act, which revealed coding errors in the original data that invalidated the results. But the replication process took six years, by which time the new lending rules had long been enacted.
U.S. Centers for Disease Control and Prevention on obesity
A 2004 study published in the Journal of the American Medical Association from the U.S. Centers for Disease Control and Prevention claimed obesity kills 400,000 Americans annually. The study attracted significant media attention and resulted in the U.S. government immediately allocating $60 million for obesity-related programs.
But other researchers soon discovered that the study’s data were unreliable and that a proper peer review had not been conducted. The next year CDC scientists estimated the number of deaths attributed to obesity might only be 26,000, and the CDC began downplaying any numerical estimate of deaths related to obesity.
The “hockey stick” graph and climate change
A 1998 study into the climate history of the northern hemisphere, led by Michael Mann, resulted in a graph implying the Earth’s climate cooled slightly for 900 years and then warmed rapidly in the 20th century. The graph was used extensively by the United Nation’s Intergovernmental Panel on Climate and played an influential role in convincing governments around the world to ratify the Kyoto Protocol in 2002.
But when independent researchers McKitrick and Stephen McIntyre tried to replicate Mann’s results, they were stymied by his refusal to identify the data he used and to clarify key steps in his calculations. Using what little data were available, they found errors in Mann’s work that invalidated his conclusions.
In 2006, the U.S. National Research Council investigated the issue and concluded that Mann’s study failed key tests of statistical validity. Mann’s conclusions were also deemed insupportable by an expert panel led by Edward Wegman, professor of statistics at George Mason University and chairman of the National Academy of Sciences Committee on Theoretical and Applied Statistics, which was convened at the request of the U.S. Congress.
“Publicly-traded companies are required by law to ensure transparency and veracity in all their financial reports. Yet the same stipulations don’t apply to academic research or academic journals, even when large amounts of public money are at stake,” McKitrick said.
Statistics are like a bikini. What they present is suggestive, but what they conceal is vital--Aaron LevensteinPhoto link here. Previous B.S. installment here.
Professor Paul Light calculated that there are now as many as thirty-two layers of federal officials between the person doing the job and the person on top. (The rule of thumb for well-run companies, by contrast, is five layers.) Laws designed to prevent corruption have the effect of thickening the cover of bureaucracy in which corruption can thrive. . . The problem is in the premise--that law should tell people how to do things. Making detailed laws is like pointing a car in one direction and leaving the passengers in it without the power to turn the wheel when they hit a curve. Sooner or later the car drives off a cliff.
The ant works hard in the withering heat all summer long, building his house and laying up supplies for the winter. The grasshopper thinks he's a fool and laughs and dances and plays the summer away.
Come winter, the shivering grasshopper calls a press conference and demands to know why the ant should be allowed to be warm and well fed while others are cold and starving.
CBS, NBC, and ABC show up to provide pictures of the shivering grasshopper next to a video of the ant in his comfortable home with a table filled with food.
America is stunned by the sharp contrast. How can this be, that in a country of such wealth, this poor grasshopper is allowed to suffer so?
Kermit the Frog appears on Oprah with the grasshopper, and everybody cries when they sing, "It's Not Easy Being Green."
Jesse Jackson stages a demonstration in front of the ant's house where the news stations film the group singing, "We shall overcome." Jesse then has the group kneel down to pray to God for the grasshopper's sake.
Tom Daschle & John Kerry exclaim in an interview with Peter Jennings that the ant has gotten rich off the back of the grasshopper, and both call for an immediate tax hike on the ant to make him pay his "fair share."
Finally, the EEOC drafts the "Economic Equity and Anti-Grasshopper Act," retroactive to the beginning of the summer. The ant is fined for failing to hire a proportionate number of green bugs and, having nothing left to pay his retroactive taxes, his home is confiscated by the government.
Hillary gets her old law firm to represent the grasshopper in a defamation suit against the ant, and the case is tried before a panel of federal judges that Bill appointed from a list of single-parent welfare recipients.
The ant loses the case.
The story ends as we see the grasshopper finishing up the last bits of the ant's food while the government house he is in, which just happens to be the ant's old house, crumbles around him because he doesn't maintain it. The ant has disappeared in the snow.
The grasshopper is found dead in a drug related incident and the house, now abandoned, is taken over by a gang of spiders who terrorize the once peaceful neighborhood.
Washington lobbyist Christine Varney is poised to take her third pass through the revolving door of lobbying and government with her nomination by President Barack Obama to be his administration’s top antitrust enforcer.
Also, on Thursday, Obama nominated Derek Douglas, a former lobbyist for the O’Melveny & Myers law firm and Center for American Progress, as special assistant on urban affairs.
As with most of the at least 14 former lobbyists nominated or hired by Obama, Varney and Douglas appear to be not covered by his executive order restricting the official activities of former lobbyists.
Obama’s first executive order forbade appointees who had served as registered lobbyists to “participate in any particular matter on which [they] lobbied within the two years before the date of my appointment” or “participate in the specific issue area in which that particular matter falls.”
I hope the stimulus package can be reversed just as easily and quickly!
I think we are headed for the mother of all unintended consequences down the road.
If this crisis proves nothing else, it proves you cannot help people by lending them more money than they can pay back.--Phil Gramm
Surely, unintended consequences are a real danger when the monetary base has been bloated by a doubling of the Federal Reserve's balance sheet, and the federal deficit seems destined to exceed $1.7 trillion.--Phil Gramm
If you think Senator Chris Dodd was friendly with former Countrywide Financial CEO Angelo Mozilo, check out the bond the Connecticut lawmaker enjoys with Richard Blumenthal, the state's attorney general. While Mr. Dodd refuses to make public the details of his sweetheart loans from Countrywide, the state's chief lawyer not only won't investigate; he has taken to the airwaves to proclaim Mr. Dodd's innocence and even predict his re-election in 2010.Or maybe, he is the law (via Glenn Reynolds):
But the Senior Senator from Connecticut who said he personally turned a four-page draft into 80-plus pages of legislation that was passed, has crossed an ethical line. While he was crafting legislation to rescue his friends, Dodd “received $854,200 from the T.A.R.P. companies in the 2008 election cycle, including money to his presidential campaign” according to a recent Center for Responsive Politics (CRP) report.
And just this week, Dodd’s name surfaced again as recipient of $27,500 in campaign cash from the latest fraudulent investment house, Stanford Financial Group of Houston, TX, and Antigua. Robert Allen Stanford was a top Democratic contributor, and is currently at large—wanted by the F.B.I. for defrauding investors by inflating outcomes—in what appears to be a multi-billion dollar Ponzi scheme.
Glenn Reynolds says:
Returning the money doesn’t mean you weren’t in bed with him. It’s just laundering the sheets, after.
The [Obama housing] plan is moderate, and in today’s atmosphere, I view moderation as a triumph.--Ed Glaeser
Instead of rewarding the mortgage cheats, the government should bail out the honest and hardworking taxpayers who put their money in 401(k)s.--Don Surber
... can we claim a tax-deduction for our neighbors’ mortgage interest too?--Edward Stafford
Suppose you spent $1 million every single day starting from the day Jesus was born — and kept spending through today. A million dollars a day for more than 2,000 years. You would still have spent less money than Congress just did.--American Issues Project
Is the Department of Justice taking court orders seriously these days?--Judge Emmet Sullivan
Starting last September, our country has gone through six months that shook the world. We have abandoned free markets. We have abandoned democracy, in the sense of having policies that reflect the popular will. The United States has become a technocratic dictatorship.--Arnold Kling
One word that is extremely unpopular in aid documents but has great historical resonance on “power to the people” is “liberty.” Neither the 347 page World Bank 1998 “Participation Sourcebook” nor the 372-page World Bank 2006 “Empowerment in Practice” ever mentioned the word “liberty.” The poor cannot have liberty, but they can have lots of empowerment and participation and ownership and civil society. I’d rather have liberty myself.--William Easterly
Thursday, February 19, 2009
UPDATE: Via Glenn Reynolds, here is Lawrence Silberman's account from 2005:
Only a few weeks before the 1964 election, a powerful presidential assistant, Walter Jenkins, was arrested in a men's room in Washington. Evidently, the president was concerned that Barry Goldwater would use that against him in the election. Another assistant, Bill Moyers, was tasked to direct Hoover to do an investigation of Goldwater's staff to find similar evidence of homosexual activity. Mr. Moyers' memo to the FBI was in one of the files.
When the press reported this, I received a call in my office from Mr. Moyers. Several of my assistants were with me. He was outraged; he claimed that this was another example of the Bureau salting its files with phony CIA memos. I was taken aback. I offered to conduct an investigation, which if his contention was correct, would lead me to publicly exonerate him. There was a pause on the line and then he said, "I was very young. How will I explain this to my children?" And then he rang off. I thought to myself that a number of the Watergate figures, some of whom the department was prosecuting, were very young, too.
The expression "create or save," which has been used regularly by the President and his economic team, is an act of political genius. You can measure how many jobs are created between two points in time. But there is no way to measure how many jobs are saved. Even if things get much, much worse, the President can say that there would have been 4 million fewer jobs without the stimulus.Previous Bikini Statistics post here.
Statistics are like a bikini. What they present is suggestive, but what they conceal is vital--Aaron Levenstein
But even when the rules change, the effect on the stocks of publicly traded companies is probably going to be mostly psychological. That's because the Bush rules applied only to government funding, a fact that all too many people forget. Private industry has been free to plow right ahead as it sees fit, and it has. Companies like Geron have been working on embryonic stem cells the whole time, with no NIH money involved.
Another thing to remember is that several of the companies in this area work on adult-derived stem cells, rather than embryonic ones. StemCells, Inc. is one such - their stock moves around according to sentiment in this sector, but you have to wonder if many of the people trading it even realize how meaningless the embryonic stem cell restrictions are for the company. (They used to be called CytoTherapeutics, actually, but changed their name in 2000, presumably to take advantage of the publicity).
And finally, there's a really big reason that it might be a bit early to put anything other than your wild-eyed longshot funds into this area: we don't know much about it at all. The signals that regulate stem cell development are only just beginning to be worked out, and we're probably going to have to know a lot more about such things before we can have a reasonable shot at therapies. The recent case of apparent tumor generation from a Russian stem cell therapy attempt (which operation had already shown no benefit, I should add) is one sobering reminder of how ignorant we are in this area. Tissue development is hideously complicated stuff, and the potential for things to go wrong is equally, well, hideous. Primum non nocere applies here good and hard; we're going to have to move carefully to avoid causing all kinds of harm.
I'm a supporter of such research, as long as I find the sourcing of cells ethical, i.e. without harming anyone.
1. Forces the bloated and undercapitalized mortgage agencies to take on more debt without regard to creditworthiness
2. Cleans up only the least toxic loans
3. Will cost some unknowably huge amount of moneyThis is from a supporter.
Federal Reserve Chairman Ben Bernanke said Wednesday that there would be drawbacks to the federal government nationalizing banks.I thought this almost 2 years ago, and the evidence continues to mount.
But by investing in failure, the [Obama] Administration will also prolong the housing downturn and make financing a home purchase more difficult for future borrowers. Meanwhile, the plan isn't likely to slow the continuing decline in housing prices.--WSJ Editorial Board
One very troubling point is that, whether measured using 30-day or 60-day delinquencies, re-default rates increased each month and showed no signs of leveling off after six months and even eight months.--John Dugan, Comptroller of the Currency
GM's Plan: Subsidize Our 48-Year-Old Retirees--Paul Ingrassia
Then gradually I began to intellectually reject some of the delusionally influenced lines of thinking which had been characteristic of my orientation. This began, most recognizably, with the rejection of politically-oriented thinking as essentially a hopeless waste of intellectual effort.--John Nash
Talent is not a rare thing. But the will to use it and the technique which gives it form are not so easy to acquire. It takes a good deal of humiliation to make a success, just as it takes a good deal of living to understand why this must be so.--Hal Holbrook
The [new economic stimulus legislation] makes clear that partnerships like Charter Holdco, parent company of Charter Communications Inc., also are eligible to benefit from the provision. Under normal tax rules, forgiveness of partnership debt is counted as a "deemed distribution" to the partner. The law ensures that the income from this distribution does not have to be recognized until 2014.Since Mr. Allen's stake in Charter is around 50%, his partnership share of the debt forgiveness could be as much as $4 billion.
Wednesday, February 18, 2009
Now, with the Estate Tax looming (I’m 70), I can see no way for our company to survive. At my death, my family will have no choice other than to sell our company. The only market will be a major corporation. Typically when this happens in the forest industry, the land is clear cut, offices consolidated, mills closed.
Five times our family has been subjected to the Estate Tax. Between the 1950s and 1980s, vast amounts of money (tens of millions of dollars) were raised to pay the tax. Lands were clear cut, mills liquidated, communities destroyed, but we survived. The next hit will be too great. The Estate Tax will take us out.--John Anthony
Meredith A. Whitney, a leading banking services analyst, is leaving Oppenheimer & Company to form her own firm, people briefed on her decision said Wednesday afternoon.
After all, this was an erstwhile sign of the top. Photo link here.
Take a moment to consider the multiple layers of leverage in this story. First, you have Goldman's stock which was inflated by the bank's huge leverage. Then you're using that as collateral for margin loans, so more leverage. And then with that money, you're buying hedge fund and private equity stakes, which are levered still. Three layers of leverage. It doesn't take much to get wiped out when you're squeezing things that far.
Previous BS post here.
To wit, his chart:
- truncated the data stream as to eliminate any context of historical levels, volatility, highs, lows, etc.--without context data are meaningless;
- used an abridged timeseries when the full series tells the opposite story (democrats have a negative average growth in employment, republicans have a positive);
- doesn't adjust for economic policy lag;
- implies that the president alone (or in majority) controls the factors of production, employment, and output without exogenistic factors.
Statistics are like a bikini. What they present is suggestive, but what they conceal is vital--Aaron Levenstein
Apologies, regular readers. A photo would be too disturbing.
Praise Dubai. The Arab city-state, once fabled for its real-estate extravaganzas (and now for its extravagant debts), claims to be so concerned for the personal security of an Israeli tennis player that it is refusing her a visa to play in a championship tournament. Maybe next time the emirate will generously extend this security guarantee to all Israeli citizens.Oh, wait: Dubai already forbids Israeli passport holders from setting foot on its soil.
Happily, the Lords of Tennis seem to be having none of it. Larry Scott, chief executive of the World Tennis Association, plans to weigh sanctions against Dubai, including excluding it altogether from its tournament calendar. And Ken Solomon of the American Tennis Channel has decided not to televise the games. "Sports are about merit, absent of background, class, race, creed, color or religion," he told the New York Times. "This is an easy decision to come by, based on what is right and wrong."
I would sooner take up arms against a government that saw me as a child than vote for it.--Clive Crook
Harry Truman "scared hell" out of the country to get it ready to support a multigenerational facing-down of the Soviets. Scaring hell out of the economy, begun by President Bush and continued by President Obama, has produced only the runaway crisis it was advertised to prevent.--Holman Jenkins
I have turned an elephant into a cheetah.--Lalu Yadav, on turning Indian Railways back to profitability
Donald Trump seems to view stiffing creditors via bankruptcy as a standard business strategy.--Harvey Wallbanger
Jesus was a carpenter; Obama can’t assemble a cabinet. --Andrew Koenig
Television hangs on the questionable theory that whatever happens anywhere should be sensed everywhere. If everyone is going to be able to see everything, in the long run all sights may lose whatever rarity value they once possessed, and it may well turn out that people, being able to see and hear practically everything, will be specially interested in almost nothing.--E.B. White
When President Barack Obama signed the American Recovery and Reinvestment Act of 2009 into law yesterday, he was adding to what is already almost guaranteed to be the largest deficit in American history. In January, the Congressional Budget Office projected that the deficit this year would be $1.2 trillion before the stimulus package. That's more than twice the deficit in fiscal 2008, more than the entire GDP of all but a handful of countries, and more, in nominal dollars, than the entire United States national debt in 1982.But while the sum is huge, it is not in and of itself threatening to the solvency of the Republic. At 8.3% of GDP, this year's deficit is by far the largest since World War II. But the total debt is, as of now, still under 75% of GDP. It was almost 130% following World War II. (Japan's national debt right now is not far from 180% of that nation's GDP.)
Still, it's the trend that is worrisome, to put it mildly. There have always been two reasons for adding to the national debt. One is to fight wars. The second is to counteract recessions. But while the national debt in 1982 was 35% of GDP, after a quarter century of nearly uninterrupted economic growth and the end of the Cold War the debt-to-GDP ratio has more than doubled.
It has been widely noted that 2009 will have the first "trillion-dollar deficit" in American history. Actually it's the second. In fiscal 2008, the national debt increased from $9 trillion to slightly over $10 trillion. Yet the budget deficit in the last fiscal year was officially reported as being $455 billion. How could the national debt have increased by considerably more than twice the "deficit"? Simple. Just call the money borrowed from the Social Security trust fund an "intragovernmental transfer" and exclude it from the calculation of the deficit.
Corporate managers have gone to jail for less book cooking than that.
Tuesday, February 17, 2009
As word leaks out that the World Bank effectively funded the demolition of homes of the very poor residents of a small village, Jale, in Albania, and then refused to speak about it for more than a year, one can only hope that the Bank will spend as much time thinking through what went wrong as it will doing damage control.
In late November 1999, with the Clinton Administration's crackdown on money-laundering under way, Stanford hired one of Washington, D.C.'s most respected lobbying firms, Verner Liipfert, Bernhard, McPherson & Hand. Suddenly, in February 2000, Stanford Financial Group - which had never made a federal campaign contribution before - started pouring money into Republican and Democratic party committees.
Stanford's lobbying disclosure reports in 2000 made it clear that the company had only one interest in federal policy: money-laundering legislation. Former Treasury Department officials confirmed, in interviews with Public Citizen, that Stanford Financial vigorously opposed the legislation - along with several other Texas-border banking institutions - in meetings held on Capitol Hill. Between February 2000 and June 2001, Stanford Financial gave Republican party committees $208,000 and Democratic party committees $145,000.
But Stanford didn't stop there. Stanford Financial and R. Allen Stanford gave another $95,000 to the 527 groups of three influential politicians - Senate Majority Leader Tom Daschle ($40,000), House Democratic Caucus Chairman Martin Frost ($50,000), and Senate Minority Leader Trent Lott ($5,000).
In doing so, Stanford became the single largest contributor between July 1, 2000 and June 30, 2001 to the 527 groups of Daschle and Frost. (Public Citizen's efforts to discuss these contributions were rebuffed by a Stanford Financial Group spokesperson.)
Stanford also contributed the maximum allowed to Daschle's 527, given Daschle's self-imposed limit of $10,000 per donor per year. Stanford contributed $10,000 from his company and $10,000 from himself in both 2000 and 2001.
Awhile ago here, I mentioned some false starts with Intrade's 2009 Depression prediction contract. Via Chris Masse, Jay Hancock updates us and says all is not good.
Intrade should have followed this precedent in recession contracts and used real GDP, in designing these erstwhile depression futures.
Mike Penning, the shadow health minister, said: "It is a scandal that millions of people are resorting to pulling out their own teeth as a result of Labour's disastrous mismanagement of National Health Service dentistry.BCWUW4: Be careful what you wish for. Previous post here.
The reason the Rockets insist that Battier guard Bryant is his gift for encouraging him into his zones of lowest efficiency. The effect of doing this is astonishing: Bryant doesn’t merely help his team less when Battier guards him than when someone else does. When Bryant is in the game and Battier is on him, the Lakers’ offense is worse than if the N.B.A.’s best player had taken the night off. “The Lakers’ offense should obviously be better with Kobe in,” Morey says. “But if Shane is on him, it isn’t.” A player whom Morey describes as “a marginal N.B.A. athlete” not only guards one of the greatest — and smartest — offensive threats ever to play the game. He renders him a detriment to his team.
Love makes you fat.--Alex Tabarrok
So in the name of improving health care, government has increased its stake in making sure that lots of people continue to smoke.--George Will
It turns out there is no statistic that a basketball player accumulates that cannot be amassed selfishly.--Michael Lewis
You don’t see too many good-looking girls with Battier jerseys on. It’s usually 12 and under or 60 and over. That’s my demographic.--Shane Battier
The Seattle City Council is expected Tuesday to approve a surcharge on city water customers to help cover the cost of a $22 million court-ordered rebate to water customers.--Kathy Mulady
Washington, which has run up a $10.7 trillion national debt, wants to punish Wall Street execs for running their companies into the ground. How ironic.--Chicago Tribune Editorial Board
... under the "stimulus" bill that President Obama will sign today, marginal tax rates for some of the most-productive people in the world will rise.--David Henderson
... ultimately, the health of the economy relies on the ability of the private sector to generate growth, and the private sector to generate jobs. It's the tax revenue from that growth, those jobs, that allow the government to create government jobs. In the short term, the government can borrow and spend, but if the private sector and the labor market are not growing, eventually lenders will get worried about the ability to repay and raise the interest rates they charge. Result: well, there are a lot of deposed Latin American heads of state who could describe the result in some very vivid language.--Megan McArdle
The stimulus bill's adverse incentives deserve special attention because of the government's current approach to the banking sector. While infusing large amounts of capital into banks, the government has chosen to leave their management largely to the discretion of bank executives. This makes executive incentives of paramount importance. Compensation structures with distorted incentives may have already imposed large losses on investors and the economy. Public officials should be wary of introducing new distortions and perverse incentives. With so much hanging in the balance, ensuring that those running the country's banks have the right incentives is as important as ever.--Lucian Bebchuk
If [Greg] Mankiw's list [of economist consensus] is the best economics can do, it sure seems like a naked emperor moment to me. Where's the beef? My challenge would be simple: please list 14 useful, non-obvious predictive rules that economics provides that have survived rigorous, replicated falsification trials.--Jim ManziMany Americans know that it took strong government action in the 1950s and 1960s to end Southern segregation. Far too few realize that it was government action that established segregation in the first place. Today, when the power of the state is being aggrandized as never before, the history of Jim Crow offers a cautionary reminder: When the political class overrides the private sector, what ensues can be a national disgrace.--Jeff Jacoby
Friday, February 13, 2009
TV ratings for the Pro Bowl were down from a year ago, but were still higher than for the Kobe vs. LeBron matchup on the same day.--Mark Divver
The Census Bureau, which is part of Commerce, is one of the most rigorously nonpartisan operations in government and for years has fought off pressure from left-wing minority factions to adjust its count upward on their behalf. Successions of bureau directors have resisted this pressure.
The Obama White House, however, indicated that it might be willing to involve itself more directly in the Census Bureau, with Press Secretary Robert Gibbs claiming "historical precedent" for a closer association. This put Mr. Gregg in an impossible situation. It is bad enough that one of the Senate's famous straight arrows had his integrity questioned. Equally impossible, the White House's expressed willingness to bring the Census director under the informal sway of, say, Chief of Staff Rahm Emanuel effectively undermined the authority Mr. Gregg would have needed to run his department.
President Obama could have resolved this mess by telling Senator Gregg that as always the Census Bureau would report only to the Commerce Secretary. Instead, Mr. Gregg withdrew, with Press Secretary Gibbs issuing a rather ungracious statement that Senator Gregg's "change of heart" was to blame.
This is a telling moment. The rift over Census methodology is a long-running controversy. It looks as if Mr. Obama, under pressure from the left, has let a second-order issue cause a highly visible and much-applauded Cabinet nomination to collapse. Anyone else thinking of joining President Obama's "team of rivals" will take note.
No one really liked you when you were making $45 million a year. How do you think they’ll treat you when you’re poor?--Michael Lewis
These days, the most dangerous place for Chuck Schumer in Washington is between Susan Collins and a camera.--Kimberley Strassel
[Treasury Secretary] Geithner's performance ... was pathetic. He was an empty suit with an empty plan.--Ed Yardeni
You’re getting $600. What can you do with that? Not to be ungrateful or anything. But maybe it pays down a bill, but it doesn’t pay down every bill every month.--Michelle Obama on President Bush's stimulus package (not her husband's)
Krugman calls his book and his blog The Conscience of a Liberal. What conscience? If we can recall bad peanut butter, why can't we also recall a Nobel Prize?--Alan Reynolds
House Judiciary Chairman John Conyers's bill, which is moving swiftly through Congress (and companion legislation introduced by Sen. Richard Durbin) would allow bankruptcy judges to modify home mortgages by reducing both the interest rate and principal amount on the loan. This would be a profound mistake.
If Congress wants to deal with the rising number of foreclosures, it should not create a new mess by converting the mortgage crisis into a bankruptcy crisis. Doing so will open the door to a host of unintended consequences that will further freeze credit markets, raise interest rates for new home buyers, and spread the mortgage contagion to other types of consumer credit. Congress needs to reject this plan and look for better solutions.
President Obama has done a masterful job disguising his Administration's growing antiterror maturity, but this week produced further evidence that he is erring on the side of keeping the country safe rather than appeasing the political left. The Justice Department filed to dismiss a federal appeals case involving rendition, embracing an argument developed by . . . the Bush Administration.
Back on Inauguration Day, I predicted twenty similarities between the two Presidents. About half have been already realized.
Thursday, February 12, 2009
Chairman Frank, on July 14, 2008, you made the following pronouncements about Fannie Mae and Freddie Mac, the two huge government-sponsored enterprises that are the key players in mortgage finance:
“Fannie and Freddie are fundamentally sound.”
“They are not in danger of going under.”
“Looking at the financials, they’re solid.”
You followed that analysis with a forecast. Referring to legislation before your committee to allow the Treasury to lend to and buy unlimited shares in the GSEs, you said: “We’re doing three separate things that make it much less likely -- very, very unlikely -- that we’ll have this kind of a housing crisis six months or a year from now.”
Less than two months later, Fannie and Freddie were wards of the state.
Just answer the questions, Mr. Chairman.
4. A lot of the stimulus will shift people from one job to another, rather than simply employing the current unemployed. We really don't want to take people from producing something useful to producing something wasteful.5. Many on the left are boasting that the U.S. government could borrow lots more (look at the current T-Bill rate), forgetting they used to warn us that international capital flows, as amplified through noise traders and speculators, mean that crises can arrive in a single, whiplash moment, bringing countries from riches to rags virtually overnight. Somehow those old narratives are being forgotten, I wonder why.
All you need to do is grant visas to two million Indians, Chinese and Koreans,” said Shekhar Gupta, editor of The Indian Express newspaper. “We will buy up all the subprime homes. We will work 18 hours a day to pay for them. We will immediately improve your savings rate — no Indian bank today has more than 2 percent nonperforming loans because not paying your mortgage is considered shameful here. And we will start new companies to create our own jobs and jobs for more Americans.OK, so it makes it that much harder to compete in school. But we'll still have sports, right?
I would say that more than half of the causes required the government as a catalyst or an incompetent regulator/overseer (while claiming potency).
Politicians can’t do much to fix an economy, but they’re great at wrecking one.--Glenn Reynolds
We hate you guys. Once you start issuing $1 trillion-$2 trillion … we know the dollar is going to depreciate, so we hate you guys but there is nothing much we can do.--Lueo Ping, China Regulatory Commission
The politicians sold TARP to America’s credit junkies as the fix for their credit woes. But they failed to mention that loose lending is exactly what created the mess with the banks in the first place. The good news is that judging by today’s CEO testimony, the banks are not in such bad shape anymore. TARP worked. Everything will be fine. If you believe the CEOs.--Evan Newmark
... [there is] obvious uncertainty that comes from modeling a hypothetical package rather than the final legislation passed by the Congress.--Christina Romer and Jared Bernstein
I sat here in front of my television and laughed at Maxine Waters, because her apparently random ramblings are a true spectacle. One laughs because one can't cry. But this woman is sitting on the House Financial Services Committee. She is supposed to help craft the bills that govern our financial system. And she clearly doesn't have the first shred of an inkling of a clue of how said financial system works. Her questions had the air of someone who couldn't quite wrap her mind around the complexities of the E-Z Reader consumer activist pamphlets from which she had presumably cribbed them.--Megan McArdle
But coming after four months of the TARP's dizzying billions spent in futility, we get a president proposing to spend nearly $1,000,000,000,000 on what he calls "stimulus." Even a populace numb to its government's compulsive spending woke up to that fantastic sum.--Daniel Henninger
Transparency is not in President Obama’s best interest right now. Thus, the political urgency to get a bill on his desk he can sign.--Karen Henretty
Consider high trade barriers, farm price supports and production limits, price and entry regulations in transportation and energy, interest rate caps and branching restrictions, national-origin immigration quotas -- does Paul Krugman really wish to defend such things? Yet all of those policies--along with the labor laws, high minimum wage, and progressive tax rates that Krugman does celebrate--were constituent elements of the postwar economic order. All shared the same bias in favor of producer welfare at the expense of consumer welfare.--Brink Lindsey
If we tried to suppress the expansion of the subprime market, do you think that would have gone over very well with the Congress? When it looked as though we were dealing with a major increase in home ownership, which is of unquestioned value to this society — would we have been able to do that? I doubt it.--Alan Greenspan
Real victories against malaria would be great, but false victories can mislead and distract critical malaria efforts. Alas, [Bill and Melinda] Gates are repeating numbers that have already been discredited.--William Easterly
In 2003, amid debate about the Bush tax cuts and a budget deficit of merely $400 billion, Maine Senator Olympia Snowe demanded that any tax cuts be capped at $350 billion. "At a time of growing federal deficits," the Republican declared to much media praise, "it is especially important that this plan be right-sized without putting our future at risk."
Flash forward to Tuesday: Ms. Snowe provided one of three crucial GOP votes that helped Democrats pass $838 billion in new spending and "tax cuts" -- often for people who pay no taxes. The deficit for 2009 even before this stimulus? $1.2 trillion.
The $500-per-worker credit for lower- and middle-income taxpayers that Obama outlined during his presidential campaign was scaled back to $400 during bargaining by the Democratic-controlled Congress and White House. Couples would receive $800 instead of $1,000. Over two years, that move would pump about $25 billion less into the economy than had been previously planned.What Walmart has done. (Regardless of paying income taxes or not).
Officials estimated it would mean about $13 a week more in people's paychecks when withholding tables are adjusted in late spring. Critics say that's unlikely to do much to boost consumption.
This is a good day for freedom.
Bank of America Corp., JPMorgan Chase & Co. and Morgan Stanley may decide after enduring yesterday’s Congressional hearing that the old Troubled Asset Relief Program is more trouble than it’s worth.
Eight chief executive officers of the biggest U.S. banks heard lawmakers in Washington criticize their bonuses, underwriting fees and perks. Rep. Emanuel Cleaver, a Missouri Democrat, read questions from angry constituents asking what banks had done with taxpayer money they’d taken from the $700 billion TARP fund, and Rep. Michael Capuano, a Massachusetts Democrat, said he “cannot believe no one has prosecuted you.”
With more scrutiny ahead, bankers including JPMorgan’s Jamie Dimon, Morgan Stanley’s John Mack and Goldman Sachs Group Inc.’s Lloyd Blankfein have said they’d like to repay government loans as soon as possible. BB&T Corp. CEO Kelly King told an investor conference yesterday that his Winston-Salem, North Carolina-based bank wants to be first to get out of TARP and escape U.S. restrictions, which can be added retroactively.
Wednesday, February 11, 2009
Obama wants too much to be liked. This isn't a character flaw. In fact his winning personality and likability have served him well through the years. Growing up in multiple cultures -- black and white, American and Indonesian -- he had to learn how to get along. By all accounts, he became easy company.
But there's a price one pays in becoming president. Giving up being liked is the ultimate public sacrifice. This was the hardest lesson for Bill Clinton, who loved people and found the isolation of the presidency particularly brutal. Similarly, Obama wants to stay in touch with everyday Americans, as symbolized by his reluctance to surrender his BlackBerry.
A dwelling-house, as such, contributes nothing to the revenue of its inhabitant. If it is lett [sic] to a tenant for rent, as the house itself can produce nothing, the tenant must always pay the rent out of some other revenue. [If rented,] the revenue of the whole body of the people can never be in the smallest degree increased by it.
There were also political calculations, including a decision made early to not consult heavily with Mr. Paulson's team, according to people familiar with the situation. The Obama team spent weeks wrestling with many of the same issues that bedeviled Mr. Paulson's efforts, including how to deal with bad assets.The Obama administration lost its option to blame the Bush administration for giving it bad information and advice. I think that might be the big mulligan.
UPDATE: I guess I was channeling Tyler:
The Republicans were just stupid and irresponsible and now the Democrats are smart but they lack experience at the rudder and they need another try to get it right.
Both the House and Senate stimulus bills include about $20 billion in incentive payments (mainly through Medicare and Medicaid) to encourage the digitization of medical records. Fair enough. But one of the reasons only an estimated 17% to 29% of doctors use health IT is because there are still many technical issues to work out. Different systems must be compatible so doctors can communicate with each other, coordinate care and share information -- and they don't want to invest in a platform that could become as obsolete as HD-DVD.
Democrats have decided that the way to jump this gap is for government simply to pick the next Blu-Ray. Instead of building on a voluntary public-private standard-setting body created by the Bush Administration, the stimulus bill codifies it as a federal office and gives it broad new powers if private companies are not "substantially and adequately" meeting the needs of doctors and hospitals. The health IT outfit will soon be deciding which platforms are up to code and shutting down competitors.
This will certainly muffle innovation, given that high-school dropouts have been known to scam U.S. health bureaucrats out of millions of dollars that should be preventable with off-the-shelf auditing software. Anyway, what's the rush? Democrats give the game away by mandating that most medical providers who aren't linked into the government-approved health information network after 2016 will start to be penalized. Their real political goal is to make a down payment on national health care.
The first was across-the-board reductions in tax rates to provide incentives for saving, investment, entrepreneurship and work.
The second component was deregulation to remove unnecessary costs on the economy.
Third was the control of government spending. In 1981, Reagan forced through Congress not only his famed, historic tax cuts, but also a package of budget cuts close to 5% of the federal budget -- equivalent to roughly $150 billion today.
The fourth component of the Reagan recovery plan was tight, anti-inflation monetary policy, which was spectacularly successful.
We know such policies work because they turned around in just two years an economy far worse than today's. We were suffering from multiyear, double-digit inflation, double-digit unemployment, double-digit interest rates, declining incomes, and rising poverty. In fact, what we suffer with today is not the worst economy since the Great Depression, but the worst economy since Jimmy Carter -- the last time liberals were dominant politically and intellectually.
Commuters give the city its tidal restlessness; natives give it solidity and continuity; but the settlers give it passion.--E.B. White, Here Is New York
Yes, this grotesque scene, like a claustrophobic circle in Dante's "Inferno," was what the U.S. government has looked like for the past two weeks as it fights on over Barack Obama's stimulus package -- a mammoth, chaotic grab bag of treasures, toys and gimcracks. Could popular opinion of our feckless Congress sink any lower? You betcha!--Camille Paglia
Mr. Obama's economic policy is following not what has been proven to work but liberal ideology.--Peter Ferrara
The first however-many days of Barack Obama's presidency have been a study in amateurism.--Kathleen Parker
Bush's contempt for the media meant he never stayed long enough to bore us.--Kathleen Parker
It's like watching your crazy aunt challenge your boyfriend to prove that fairies aren't real.--Megan McArdle, on watching Maxine Waters at the TARP hearing
Geithner hopes that his structure will encourage the private sector to come up with the Goldilocks price. The problem is that the private sector has valued the assets -- it just came up with the "wrong" price. Geithner's "plan" is a wing and a prayer that the “private sector” will come up with a “better” price. No wonder the market went down.--Larry Ribstein
Yet regulatory forbearance is the most important item in the government toolkit, and the giant raspberry Mr. Geithner received from the market yesterday should be his signal that the market understands this and worries he doesn't.--Holman Jenkins
... while being creative with statistics, the President dismissed Sweden's (successful) approach to restructuring its banking sector on both economic and ideological grounds. His stance that Sweden "only" nationalized five banks, while the US would need to nationalize thousands to achieve the same effect, is both specious and absurd. No discussion of relative GDPs. No comparison of the size of the banks that were nationalized relative to, say, the top 10 banks in the US. It was one of those typical "a politician says it on TV so it must be true" moments, only I'm really disappointed that President Obama is resorting to such tactics to sell the Geithner Plan not a month into his Administration.--Roger Ehrenberg
Odd by the way that Paul [Krugman] thinks Econ 101 is all you need to talk about the stimulus intelligently but far too simplistic when it comes to trade.--Clive Crook
It seems from your writing that I at least had the beneficial effect of neutralizing [Paul] Krugman. ... You don't think it's pretty wild to have a multiplier of 1.5, so that government spending is not only free, it has negative costs?--Robert Barro, to Clive Crook
wonders Martin Wolf:
Geithner was a huge influence on the Hank Paulson plans last year. If those plans were such a failure, why is Geithner pulling the trigger on more of the same?
What is needed? The answer is: focus and ferocity. If Mr Obama does not fix this crisis, all he hopes from his presidency will be lost. If he does, he can reshape the agenda. Hoping for the best is foolish. He should expect the worst and act accordingly.
Yet hoping for the best is what one sees in the stimulus programme and – so far as I can judge from Tuesday’s sketchy announcement by Tim Geithner, Treasury secretary – also in the new plans for fixing the banking system. I commented on the former last week. I would merely add that it is extraordinary that a popular new president, confronting a once-in-80-years’ economic crisis, has let Congress shape the outcome.
Tuesday, February 10, 2009
10. "Hey, it's Mark McGwire. Want to get together this week and not talk about the past?"
9. "Joe Torre here -- thanks for helping book sales"
8. "Could you find a steroid that keeps you from choking in the playoffs?"
7. "Are you worried this will taint all the championships you didn't win?"
6. "It's Bernie Madoff. Nice try but I'm still the most hated man in New York"
5. "Michael Phelps here. Got any snacks?"
4. "This is Sammy Sosa. Just pretend you don't speak English"
3. "Michael Phelps again. Did I call you or did you call me?"
2. "Hey, it's Rod Blagojevich -- I'll say you're innocent, if you say I am"
1. "It's Madonna. You got a phone number for Jeter?
In the afterglow of President Obama's inauguration, it's easy to forget that Mrs. Pelosi's similarly historic elevation to the speaker's chair just two years ago had its own elements of a coronation -- and its own claims of change we were to believe in.Instead of saving the world for those yet to be born (like the generation of WWII), we are passing on huge liabilities.
Like President Obama, who characterized his ascent to the White House as a mark of "how far we have traveled," Speaker Pelosi spoke of her swearing in as a "moment for which we have waited more than 200 years."
Like President Obama, whose supporters made ubiquitous a red, white and blue image of the candidate over the word "hope," Speaker Pelosi's supporters brandished their own icon at her swearing-in: commemorative buttons depicting her as Rosie the Riveter flexing her muscle.
And like President Obama, Speaker Pelosi heralded her election as "a call to change." In her acceptance speech, she put it this way: "We have made history," she said. "Now let us make progress for our new America."
That was January 2007. Before the year was out, her approval ratings would be lower than George W. Bush's.
Under her leadership, Congress failed to pass a single appropriations bill until early November. Congress also failed to override the president's veto on what Democrats thought would be an easy win for an expansion of the State Children's Health Insurance Program. Most significant of all, Congress failed to force Mr. Bush to begin what Democrats had said was their real goal: a U.S. withdrawal from Iraq.
Just as she did with war funding, Mrs. Pelosi is once again putting her fellow Democrats -- Mr. Obama included -- in the position of defending the indefensible. And she let it all ride on a game of chicken. Her bet has been that a Republican minority would sooner or later cry "uncle" on a laundry list of pet Democratic spending projects rather than risk being painted as holding up vital economic legislation.