Things are bad in Sudan

not Rwanda bad, though.

Speaking of Rwanda, please check out this opportunity to get involved. Several of my friends are running in the Chicago Marathon for the sake of the kids. (If you do register, please select "* Other" for the advocate, and write in "Caveat Bettor" below. You can pick any runner on the list that you like!)

Just $1.15 per day (for 3 years) supplies a child food, clean water, health care, education, and AIDS prevention services. You will receive a dossier with a photo and background of your beneficiary. You are actually moving the kid out of the Bottom Billion. I'm heading out to the Kigali region next year to build some homes for single-parent and child-headed households, and will check up on your child, too. Let me know if you would like me to do so: caveatbettor-at-gmail-dot-com.

Graph of the day

at Paul Kedrosky's place.

Modern Life: sad but true

Illustration from Chris Masse.

I'll actually be jumping on a boat and heading to Bermuda next week. No blogging planned. I'm even going to read a book!

12% inflation

effective today, as legislated by the U.S. government.

It's not the insurance companies or the pharma companies or the doctors who are perverse

it's the incentives!

And the subsidies, of course.

A good thing: secondary market in airline seats

on the Northwest Airlines Seat Exchange.

POTUS: Professor of the United States?

Some profs seem to think so.

It's the boys with the fat tails, not the girls

when it comes to higher education.

Quotes of the day

[Adam] Smith was skeptical not about the strength of altruism, but about its scope or reach.--Gary Becker

If you make the world safe for idiots (and reckless borrowers, investors and executives), you'll create a world full of idiots (reckless borrowers, investors and executives).--Mark Perry, on the moral hazard of government bailouts

In blind tests, Domaine Ste. Michelle Cuvee Brut, a $12 sparkling wine from Washington, is preferred nearly two to one to $150 Dom Perignon if you strip away the labels.--Steven Levitt

Financial markets will always be subject to miscalculations and mistakes. However, the more we ask politicians to provide perfect insulation from financial risk, the more fragile the system will become. That is the real lesson we should take from the Fannie and Freddie saga.--Arnold Kling

Venkatesh then proceeds, rather naively in my view, to call for replacing the Department of Housing and Urban Development with a better department. First of all, failure only leads to exit in markets, not in government. Second, who is to say that the next generation of programs will not also be captured by special interests?--Arnold Kling

Years ago when I was teaching at another university, I was invited to a special seminar presented by a multi-millionaire heir. The heir argued that the natural rate of interest was 5 percent because the natural life of a generation was 20 years and 5 percent is the reciprocal of 20. I’m pretty sure that this is nonsense on stilts. The audience (which included more than one Nobel prize winner) faced a real dilemma. Do you tell someone who could give you millions that he or she has a foolish idea?--Ian Ayers

Quote of the day

Rangel to file complaint against self--Susan Crabtree

Yet more ignorance from the NY Times

They are losing buyers, so they raise the price:

The New York Times suffered a 16.4 per cent decrease in June advertising revenues and warned on Wednesday that the effects of high oil prices, a slowing economy and the housing crisis were likely to weigh on its prospects for some time.

The June performance followed an 11.9 per cent decline in May advertising revenues, and suggested that an already deep erosion in newspaper advertising could be accelerating. Ms Robinson said the company would respond by raising newsstand prices for the New York Times from $1.25 to $1.50 per copy beginning in August, marking the paper’s second increase in a year.

This also explains their advocacy of increasing taxes, while not paying attention to whether that actually increases revenue or reduces poverty.

Global warming and science are diverging from one another

Here is David Evans, who was a global warming alarmist until he gathered more facts.

DISCLOSURE: I am short 2008.GLOBALTEMP.TOP5

JibJab's Time for Campaignin'

is available for viewin' and enlightenin'.

Jeff Matthews has picked the top in oil prices

and he is smart guy.

Paul Kedrosky on the moral hazard

created by the U.S. government.

A successful anti-poverty program

will eschew subsidies and promote imports.

Just about everyone in this country has access to everything on this list, plus home equity.

If only we could increase the poor's access to food, education, and healthcare in the same way!

Don Surber's Presidential Backtest

here. A few samples:

1. George Washington. Old warrior. McCain.

2. John Adams. Thin-skinned. Alien and Sedition Act. Obama.

3. Thomas Jefferson. Had children with a black woman. Obama.

4. James Madison. Short, married to a hot woman. McCain.

5. James Monroe. The Monroe Doctrine. McCain.

6. John Quincy Adams. The best ex-president ever. Obama by default because McCain won’t have as long an ex-presidency.

10. John Tyler. His Accidency. First veep to finish the term. Annexed Texas. Obama would be more likely to give Texas back. McCain.

11. James Polk. Best one term president we had. Gave so much to the nation that he died of exhaustion 3 months after leaving the White House. McCain.

12. Zachary Taylor. Mmm, cherries. Awk, dead. Who is more likely to die in office? McCain.

19. Rutherford B. Hayes. Wife, Lemonade Lucy, banned alcohol from the White House. Definitely not Cindy. Obama.

26. Teddy Roosevelt. Bully! Conservatives didn’t like him. McCain loves him. Conservatives still don’t like him. McCain.

27. William Howard Taft. Later became a Supreme Court justice to make up for a poor presidency. Obama.

30. Calvin Coolidge. Favorite president of both Ronald Reagan and Abbie Hoffman. The reason? He took naps in the afternoon. McCain.

41. George Bush. Gulf War. Dan Quayle. Stumped by a grocery scanner. McCain.

Fannie Mae Enron

Paul Gigot has been sounding the alarm for many years:

Fan and Fred also couldn't prosper for as long as they have without the support of the political left, both in Congress and the intellectual class. This includes Mr. Frank and Sen. Chuck Schumer (D., N.Y.) on Capitol Hill, as well as Mr. Krugman and the Washington Post's Steven Pearlstein in the press. Their claim is that the companies are essential for homeownership.

Yet as studies have shown, about half of the implicit taxpayer subsidy for Fan and Fred is pocketed by shareholders and management. According to the Federal Reserve, the half that goes to homeowners adds up to a mere seven basis points on mortgages. In return for this, Fannie was able to pay no fewer than 21 of its executives more than $1 million in 2002, and in 2003 Mr. Raines pocketed more than $20 million. Fannie's left-wing defenders are underwriters of crony capitalism, not affordable housing.

So here we are this week, with the House and Senate preparing to commit taxpayer money to save Fannie and Freddie. The implicit taxpayer guarantee that Messrs. Gray and Raines and so many others said didn't exist has become explicit. Taxpayers may end up having to inject capital into the companies, in addition to guaranteeing their debt.

The abiding lesson here is what happens when you combine private profit with government power. You create political monsters that are protected both by journalists on the left and pseudo-capitalists on Wall Street, by liberal Democrats and country-club Republicans. Even now, after all of their dishonesty and failure, Fannie and Freddie could emerge from this taxpayer rescue more powerful than ever. Campaigning to spare taxpayers from that result would represent genuine "change," not that either presidential candidate seems interested.

Quotes of the day

We are all worms, but I am a glowworm.--Winston Churchill

Remember to keep your Markos Moulitsas figurine in its original packaging.--James Kirchick

Wall Street got drunk.--George Bush
Who does he think served the drinks?--Megan Barnett

Making Fannie Mae private moved its liabilities off the government’s books, even if, as the recent crisis made clear, the U.S. was still responsible for those debts. It was a bit like what Enron did thirty years later, when it used “special-purpose entities” to move liabilities off its balance sheet.--James Surowiecki

If you doubt the media are in the tank for Obama, doubt no more. The refusal of the New York Times to print McCain's op-ed on Obama after an Obama piece was published has nothing to do with editorial judgment and everything to do with protecting the media's heartthrob.--Investor's Business Daily

Barack Obama is too young to be president. Yes I know he is 46 and the Constitution sets the presidential age qualification at 35 or higher, but Obama has said that we ought not to interpret the Constitution woodenly and formalistically. Perhaps we should look deeper at the presidential age limit. If we do, we will find that Obama really is too young to be president.--Steven Calabresi

If Barack Obama is elected President, he'll be far more warlike than President Bush, and far more warlike than his pre-election rhetoric suggests. Because before he's elected President, attacks on America are just attacks on America. But after he's elected President, attacks on America will also be attacks on Barack Obama.--Glenn Reynolds

Boy, I feel a lot safer now that she's behind bars. O. J. Simpson and Kobe Bryant are still walking around; Osama Bin Laden too, but they take the ONE woman in America willing to cook, clean, and work in the yard, and they haul her fanny off to jail.--George Carlin

Chinese seem more content with their government

than Americans with theirs (via Glenn Reynolds). And Americans make 10 times more than the Chinese!

Michael Barone considers the 2010 congressional seat reapportionment

and finds that the states that Bush won in 2004 gain 8 House seats:

Which is to say that, under the new electoral vote distribution, Bush's 286-to-252 electoral vote margin in 2004 becomes 294-to-244. Bush would have lost in 2004 if Ohio had not gone his way; under the projected post-2010 apportionment, Bush would have won 276-to-262 if Ohio had not gone his way. The demographic trends reflected in these projections would not prevent Barack Obama from being elected this year and re-elected in 2012, but they would make it marginally more difficult. Demography, modestly, favors the Republicans, and more than modestly over the long haul.

Quote of the day

Laws and regulations pressured lending institutions to lend to people that they were not lending to, given the economic realities. The Community Reinvestment Act forced them to lend in places where they did not want to send their money, and where neither they nor the politicians wanted to walk. Now that this whole situation has blown up in everybody's face, the government intervention that brought on this disaster in is supposed to save the day. Politics is largely the process of taking credit and putting the blame on others— regardless of what the facts may be. Politicians get away with this to the extent that we gullibly accept their words and look to them as political messiahs.--Thomas Sowell

Congress needs to be suspended for non-emergency periods

They are shooting themselves in the feet yet again:

While some kind of crackdown on the U.S. oil futures market is inevitable after so much political agitation, Congress has begun to believe its own demagoguery. The Senate may vote on a bill this week that will drive commodities trading overseas and decrease oversight and market transparency. Call it a Sarbanes-Oxley for energy.

Because commodity futures trading is a complex financial instrument, "speculation" makes an expedient scapegoat for edgy lawmakers and even aggrieved industries -- such as the airlines. But it performs a vital price-discovery function. Major energy producers and consumers, such as refiners, buy and sell these contracts to lock in oil at a future price, as a shock absorber against volatility. Essentially, they're bets that reveal market expectations about the supply and demand of oil, as well as the rate of inflation.

Even the title of the Senate's bill -- the "Stop Excessive Energy Speculation Act" -- is idiotic. True, the volume of trading has increased by about sixfold since 2000, but it can't be "excessive." The inviolable law of futures markets is that someone has to take the other side of any option. That is, the value of contracts agreed to by sellers anticipating that prices will fall must equal the value of contracts agreed to by buyers anticipating prices will rise. The overall size of the market is irrelevant.

Dick Durbin, Barack Obama, Hillary Clinton and Chuck Schumer -- the home-state Senators of the Chicago Mercantile Exchange and Nymex, respectively -- need to decide if they're going to vote to wound the competitiveness of their shareholder-owned American brokerages. Not to mention the fact that increased foreign trading wouldn't be subject to CFTC scrutiny. Congressional rabble-rousers have exaggerated the problem of "dark" markets, but they certainly seem intent on creating more of them.

Despite the assertions of Mr. Dorgan and the likes of Virgin Islands fund manager Michael Masters, the climb in energy prices has been impelled by the tight margins between world-wide supply and demand, and exacerbated by the Federal Reserve's weak dollar. Congress could avoid blowing up the U.S. futures market by conceding that reality.

Despite the assertions of Mr. Dorgan and the likes of Virgin Islands fund manager Michael Masters, the climb in energy prices has been impelled by the tight margins between world-wide supply and demand, and exacerbated by the Federal Reserve's weak dollar. Congress could avoid blowing up the U.S. futures market by conceding that reality.

Shelby Steele on Jesse Jackson's distaste for Barack Obama

He observes (excerpted):

So Mr. Jackson and his generation of black leaders made keeping whites "on the hook" the most sacred article of the post-'60s black identity.

They ushered in an extortionist era of civil rights, in which they said to American institutions: Your shame must now become our advantage. To argue differently -- that black development, for example, might be a more enduring road to black equality -- took whites "off the hook" and was therefore an unpardonable heresy. For this generation, an Uncle Tom was not a black who betrayed his race; it was a black who betrayed the group's bounty of moral leverage over whites. And now comes Mr. Obama, who became the first viable black presidential candidate precisely by giving up his moral leverage over whites.

And then Mr. Obama took it further by going to the NAACP with a message of black responsibility -- this after his speech on the need for black fathers to take responsibility for the children they sire. "Talking down to black people," Mr. Jackson mumbled.

Normally, "black responsibility" is a forbidden phrase for a black leader -- not because blacks reject responsibility, but because even the idea of black responsibility weakens moral leverage over whites. When Mr. Obama uses this language, whites of course are thankful. Black leaders seethe.

Thomas Sowell, among many others, has articulated the power of individual responsibility as an antidote to black poverty for over 40 years. Black thinkers as far back as Frederick Douglas and Booker T. Washington have done the same. Why then, all of a sudden, are blacks willing to openly embrace this truth -- and in the full knowledge that it will weaken their leverage with whites?

I think the answer is that Mr. Obama potentially offers them something far more profound than mere moral leverage. If only symbolically, he offers nothing less than an end to black inferiority.

So it has to be acknowledged that, on the level of cultural and historical symbolism, an Obama presidency might nudge the culture forward a bit -- presuming of course that he would be at least a competent president. (A less-than-competent black president would likely be a step backwards.) It would be a good thing were blacks to be more open to the power of individual responsibility. And it would surely help us all if whites were less cowed by the political correctness on black issues that protects their racial innocence at the expense of the very principles that made America great. We Americans are hungry for such a cultural shift.

Liberty and justice for all, please.

50% of taxpayers pay 3% of income taxes

I think we're moving past democracy to something else.

Graph of the day--intelligence correlates with proximity to the football

Football player Wonderlic scores by position (via Alex Tabarrok):

Quotes of the day

... Medicare pays HMOs 10 percent more than they would pay for an enrollee in traditional Medicare but the HMOs offer the enrollee 13 percent more worth of extra benefits and rebates. In other words, the HMOs pass on to the enrollee all of Medicare's "extra payments" plus some. (Note that this is exactly what one would expect in a competitive market.) Now, I am not saying that higher Medicare payments are a good idea. But I dislike the fact that politicians are being lauded for fighting "wasteful privatization" when what they are really doing is cutting medical benefits for the elderly.--Alex Tabarrok

Actually, I'd been wondering whom to blame for the fact that it would probably be cheaper, easier and maybe even faster to drive to wherever I want to go than to board one of your planes. Suddenly, all is clear. I now understand that it is oil speculators who set your hiring policies and who must have outlined the three types of people you may employ: those who grunt at me, those who sigh deeply as if my presence has ruined their day and those who are actively hostile to my smallest request.--Kim Strassel

Ed Glaeser spanks Paul Ehrlich, and good

which the latter seems to really need (via Greg Mankiw):

Unfortunately, the authors' forays into policy making are the most painful part of the book. The authors have thrown together a left-wing wish list crammed with proposals that stray far from their science. How can environmental issues get better treatment in America? The Ehrlichs propose we "stop gerrymandering." Ah yes. The best thing to save the spotted owl would be to spend millions of hours trying to pass a constitutional amendment that would prevent legislatures, which seem likely to be overwhelmingly Democratic after the next census, from redrawing the political map.

On foreign policy, they recommend that "congress should insist in the short term that the executive branch work with Russia on what may be the most crucial environmental problem of all — the threat of a humanly and ecologically catastrophic nuclear war." Is it really wise, or constitutional, for Congress to pass a resolution that forces the hand of the executive branch in conducting diplomacy? Such a resolution would do wonders to ensure that the State department has as little bargaining power as possible in its dealings with Russia.

The authors are particularly ardent in their opposition to population growth. It is true, as they point out, that there are environmental costs of having more people — all of us use natural resources and energy and bear some responsibility for greenhouse gas emissions. But there are also benefits, especially to the people being born. Each new person has a brain that might come up with new technologies that could reduce humanity's environmental impact. As an urban economist, my life's research has focused on the many ways in which we are all enriched by the people around us. Are there many parents who think that the world would have been better off if they had decided to have one less child?

The Ehrlichs are right that we face real environmental threats, but there are better and worse ways of facing those threats. Today, we need sophisticated policies that weigh costs and benefits, not more warnings. Ironically, the very success of environmental alarmism has convinced many of us that the environment is too important to be left to the environmentalists.

The Chuck Schumer Puppet Theory

at Poor and Stupid:

Someone -- with an interest -- brought Schumer information on IndyMac. Who? When? Why? What are the chances that Schumer was looking into irregularities into IndyMac because some hedgie with a big short position turned him onto it?

Well, they ain't zero.

What are the chances Schumer was "investigating" IndyMac because the Senate Banking Committee assigned that case to him? Zero.

What are the chances the SEC enforcement guys will get very shy, very fast if they pick up a trail leading up the Hill? Close to 100%. (Note, Senators have a constitutional shield against certain prosecutions of actions taken in the course of their work as Members of Congress.)

Most likely result? The SEC staff will pluck a few hapless hedgies out of the middle ranks and shoot them in the public square.

Is Schumer correct? Or did Schumer break a law by leaking his letter? What if he were a research director at a hedge fund and told people what he suspected? Would that be the kind of rumor the SEC is hunting?

Think there might be a clever hedge fund which might use Schumer to leak info so they can trade on it without fear of prosecution? Uh, yeah.

Bill Easterly on half a century of foreign aid proposal design

over at Chris Blattman's:

All aid proposals since the 60s follow the same script:

(1) announce an ambitious goal ('halving poverty')

(2) invoke Marshall Plan as a very promising precedent

(3) say you will double foreign aid (its always exactly double)

(4) ignore the historical record on previous aid programs that also did (1) through (3)

I was disappointed that Obama's advisors didn't come up with something a tad more fresh and different. Since the press mostly ignored Obama's aid proposals, I guess the political incentive to do something more than the same old pro forma proposal is not very strong.

Manny's days in Boston may be numbered

I think the new stadium in the Bronx is beckoning.

Will foreign policy or principle be Obama's material weakness?

I'm not sure, but I know that unless he improves on foreign policy, then he will not even approach the skill level of President Bush:

Yet the reason Iraq is finally getting that kind of government is precisely because of the surge, which neutralized al Qaeda and gave Prime Minister Nouri al-Maliki the running room to confront Moqtada al-Sadr's Shiite Mahdi Army. And the reason the U.S. can now contemplate more troop withdrawals is because the surge has created the conditions that mean the U.S. would not be leaving a security vacuum. On Wednesday, Mr. Maliki's government assumed security responsibility in yet another province, meaning a majority of provinces are now under full Iraqi control.

Mr. Obama acknowledges none of this. Instead, his rigid timetable for withdrawal offers Iraq's various groups every reason to seek their security in local militias such as the Mahdi Army or even al Qaeda, thereby risking a return to the desperate situation it confronted in late 2006.

The Washington Post has criticized this as obstinate, and Democratic foreign policy analyst Michael O'Hanlon of the Brookings Institution reacted this way: "To say you're going to get out on a certain schedule – regardless of what the Iraqis do, regardless of what our enemies do, regardless of what is happening on the ground – is the height of absurdity."

Mr. Obama does promise to "consult with commanders on the ground and the Iraqi government" in implementing his plans. But he would have shown more sincerity on this score had he postponed Tuesday's address until after he visited Iraq and had a chance to speak with those generals and Iraqis. The timing of his speech made it appear not that he is open to what General David Petraeus tells him, but that he wants to limit the General's military options.

Mr. Bush has often been criticized for refusing to admit his Iraq mistakes, but he proved that wrong in ordering the surge that reversed his policy and is finally winning the war. The next President will now take office with the U.S. in a far better security position than 18 months ago. Mr. Obama could help his own claim to be Commander in Chief, and ease doubts about his judgment, if he admits that Mr. Bush was right.

On the other hand, David Paul Kuhn believes:

Mr. Obama's position shifts are clumsy and ill-timed. He has built his franchise on the concept that he is a new kind of politician. But of late, he has become the reincarnation of Clintonian triangulation.

That does not mean his repositioning is wholly foolish. The timing is foolish. At some point the most liberal Democratic nominee since at least 1984 had to consider the center. Too bad for Mr. Obama that he waited until it appeared politically expedient.

Mr. Obama's moves may test his base as much as the candidate himself. Recall Hubert Humphrey, a pioneer on civil rights in 1948. Two decades later, Humphrey would not repudiate Lyndon Johnson. Humphrey's past liberal stances were forgotten. To some liberals he was on the wrong side of Vietnam, so many in the antiwar base called him no liberal at all. Today's antiwar Democratic base will have to decide how much slack it can offer Mr. Obama when he returns from Iraq.

Earnings looking pretty good so far

Bill Luby says:

Bespoke Investment Group has a surprising statistic out this morning: with 11% of the S&P 500 companies reporting, Bespoke has calculated the current quarter's EPS beat rate to be 72%. There are a lot of earnings reports still to come, but if it holds, the 72% beat rate will be the second highest in the past decade.

Even more impressive is the additional statistic that 34% of the companies that have already reported are in the financial sector, which has to be considered among the most earnings challenged in the current environment.

The stock selloff may be over. While we may see new lows, absent some geopolitical nightmare scenario, they may not be too far off of the lows we hit this week. Of course, the market may languish down here for another quarter or two. And I am still not bullish about financials.

My previous call here.

Excerpt of John Delaney's comment to the CFTC

bolded by Chris Masse:

But the relentless change that we all face will be best dealt with if we have the best information, in real time, to reduce uncertainty, risk and stress. Event market information can and has increased the quality and timeliness of decision-making. Event markets can act as a democratic mechanism that gives voice to the broadest range of event stakeholders and, in so doing, aggregates a peerless information set. By encouraging the aggregation, distribution, validation and appropriate use of the best event market information, society will benefit even more than it does today from event markets. To do otherwise than to encourage event market development would be a societal travesty.

As Intrade has been a staunch supporter of event market academic study, and supplies greater depth and liquidity in its event markets than any other platform, it seems strange not to be a preferred purveyor. Perhaps the predominant reason many academics have held back from advocating and treating all event markets alike is a sense that initiatives to clarify or unwind the legislation restraining the optimal development of event markets is unlikely to be achievable. It seems many academics and commentators suggest a slow bureaucratic and pragmatic caution rather than focus on the optimal result. While the optimal result may be more challenging to achieve, for consistency, for better price discovery for the benefit of all, as well as for the development of Intrade, we encourage CFTC to apply common goals, objectives and standards for all participants.

Quotes of the day

It is hard in this world to do well. It is hard to do good. When I hear a claim that an institution is going to do both, I reach for my wallet. You should too.--Larry Summers

Only people who are pretty sure they can't win try to claim a moral victory--the blogging equivalent of standing at the Olympic starting line and saying, "Well, I could outrun everyone, but that's so obvious that I needn't bother getting my shoes dirty."--Megan McArdle

You can't buy oil and you can't sell financials.--Wall Street trader, commenting on Washington's position for the markets this week

The church is a whore, but she is my mother.--Augustine

Freakonomics' Steven Levitt caught up in a dustup between economists

reported by David Glenn (via Tyler Cowen):

But in late May, the Journal of Political Economy rejected a critique that Mr. Liebowitz had submitted of Mr. Oberholzer-Gee and Mr. Strumpf's paper. (In economics parlance, critiques of previously published papers are known as comments.) The editor who sent the rejection notice was Steven D. Levitt, a professor of economics at the University of Chicago and the co-author of the best-selling Freakonomics: A Rogue Economist Explores the Hidden Side of Everything. Mr. Levitt's term as editor ended on June 1.

The rejection enraged Mr. Liebowitz for two reasons: First, he believes that he has demonstrated serious flaws in the file-sharing paper and that the journal owes it to its readers to discuss those flaws. Second, he discovered that the journal had used Mr. Strumpf himself as one of the two anonymous referees for his comment. (The second referee gave a positive report and advised that the comment be published.) Mr. Strumpf's role as referee was revealed when a reporter for the German newspaper Handelsblatt asked Mr. Strumpf to reply to Mr. Liebowitz's criticisms. He e-mailed to the reporter a response that was substantially identical to the negative referee report.

Tacking back TOWARD the constitution?

How refreshing for our judiciary to consider such a prospect ...

Stay in school

Historical average wages by education level, from James Hamilton:

Quotes of the day

Treasury Secretary Paulson is running the Treasury the way he ran Goldman Sachs. He's gotta make his numbers next year.--Bill Seidman, CNBC

Only the naive or disingenuous among the signers will express surprise that the media depicted the manifesto as an election-year effort to drive a wedge between conservatives and what is portrayed as a more authentic evangelicalism. Whatever the good intentions of some signers, the reporters got the story right.--Richard John Neuhaus

Did Obama fail on strategy in response to the New Yorker cover?

This post from the Economist suggests so:

First, the vast majority of commentary I've seen from Obama supporters has contained some variant on: "Yes, of course the elite readership of the New Yorker will get that it's satirical, but some of the Morlocks will take it seriously!" This is, to a first approximation, probably true, but it sounds terrible, especially if your man is trying to shake an "elitist" rap.

First, the vast majority of commentary I've seen from Obama supporters has contained some variant on: "Yes, of course the elite readership of the New Yorker will get that it's satirical, but some of the Morlocks will take it seriously!" This is, to a first approximation, probably true, but it sounds terrible, especially if your man is trying to shake an "elitist" rap.

Second, the campaign's reaction makes the story. The New Yorker's circulation is almost entirely concentrated in true-blue coastal enclaves. It might have gotten some play on hard-right chat boards and blogs, but those audiences are a lock for John McCain as surely as Manhattan is a lock for Mr Obama. Now, however, the cover is plastered all over the cable news shows, for the viewing pleasure of millions who would never have seen it otherwise. And the reason, of course, is that the cover is "controversial". Try to imagine the same story running had the Obama campaign said something along the lines of: "Oh, yes, we saw that and were tickled; it really shows effectively how absurd and desperate some of the rumour-mongering on the right is." Would it be running then? Of course not—and if it did, PowerLine would have an anyeurism about the news devoting air time to Obama propaganda.

As it is, their reaction plays into another unfavourable narrative by making it look as though Mr Obama is thin-skinned.

Your mother was right—not every perceived slight demands a reaction.

It appears that throwing money at the problem

does not solve the problem.

Quotes of the day

The illusion that [Fannie Mae and Freddie Mac] were doing virtuous work made it impossible to build a political case for serious regulation. When there were social failures the companies always blamed their need to perform for the shareholders. When there were business failures it was always the result of their social obligations. Government budget discipline was not appropriate because it was always emphasized that they were "private companies.” But market discipline was nearly nonexistent given the general perception -- now validated -- that their debt was government backed. Little wonder with gains privatized and losses socialized that the enterprises have gambled their way into financial catastrophe.--Larry Summers

In economics, it is given that people have different tastes. In happiness policy, the assumption is the opposite.--Arnold Kling

No matter what, do not let yourself become a wine expert who can tell the difference between cheap and expensive wines. When it comes to your pocketbook and wine, ignorance is bliss.--Steven Levitt

Females, older people, working people, people who live in high-crime areas of their country and people who are at the bottom 50% of their country's income distribution are more vengeful.--Naci Mocan

One reason we might have a "health care crisis" and rising medical costs is that we turn away almost 97% of the applicants to medical schools. There are now more than half a millions applicants annually to U.S. medical schools (546,817) for about 17,750 openings, meaning that 529,000 prospective physicians are now turned away every year from the necessary training to become a doctor. Now that's a real medical cartel, which significantly restricts the supply of physicians, and thereby gives its members monopoly power to charge above-market prices for their services.--Mark Perry

Scrubbing is good for cleaning

bad for covering up.

Saudi Arabia to buy $2.4 bil in Russian arms IF Russia cuts ties with Iran

Wow.

I am long the SEP08, DEC08, and MAR09 AIRSTRIKE.IRAN contracts.


UPDATE: It looks like I might have bought some of these from Tyler Cowen.

Megan McArdle gives 100 University of Chicago professors a good spank

which the latter really seem to need:

This from a University that has cultivated a reputation as one of the most intellectually rigorous campuses in the country. I'm tempted to weep.

Where to start with this festival of willful misunderstanding? I was surprised to hear that Milton Friedman is reviled in "The South", since I follow the Argentinian, Venezuelan, and South African economic press closely-ish, and I've never once heard the man's name mentioned. The only country that seems aware of his existence, or that of the "Chicago Boys" is Chile, and they kind of like him.

Second, their assessment of the effects of the "neoliberal global order" is forehead slapping, head shaking, did-they-really-say that? stupid. I haven't heard such transparently wishful claptrap since my fifteen-year-old boyfriend tried to convince me that sex provided unparalleled aerobic exercise. If you put all 100 in a room with unlimited access to Lexis-Nexis and a mountain-sized peyote stash to bring their quasi-communist fantasy life into 3D technicolor, they still couldn't name a country where neoliberalism has undermined a vibrant democracy. Nor where Demon Capital has made things worse. The worst you can say for the neoliberal order is that it doesn't make things better the way we hoped it would. Any place you can name that has been deeply screwed up since global capital arrived was at least as corrupt and otherwise awful before the capital swooped in to plant garment factories in the edenic swamps of rural poverty.

Do they think that we should do analyses that doesn't pay attention to individual incentives or the role of markets in allocating goods and services? Are they under the impression that there is still a debate on this? I thought the fall of the Soviet Union had rather spectacularly demonstrated that it's hard to allocate goods and services without markets. Indeed, one wonders where all these professors get their groceries.

Or perhaps they merely think that we should design our policies without regard to market alternatives. Not even the commissars managed that; you can't even reject markets without regarding them.

Joel Stein makes me laugh

while making sense of $8/gallon gas (via Greg Mankiw):

If MoveOn and Barack Obama really were going to bravely confront America with hard, necessary truths, they'd tell us how great $4 gas has been for us. With public transit use nationally at a 50-year high, traffic dropped 2.1% in the first four months of this year across the country. That mileage reduction -- along with people driving smaller cars, and more slowly, to save gas -- could mean that 12,000 fewer people will die in traffic accidents this year, according to a study by professors Michael Morrisey at the University of Alabama at Birmingham and David C. Grabowski at Harvard Medical School. Air pollution has been reduced enough, according to UC Davis economics professor J. Paul Leigh, to prevent 2,200 respiratory-related deaths over the last year. Less eating out and more walking and biking could mean a 10% reduction in obesity, according to Charles Courtemanche, an assistant economics professor at the University of North Carolina at Greensboro. And, apparently, higher gas prices also keep econ professors employed.

Yes, it's easy for me to revel in $4 gas because I'm rich. And because my wife and I own a Mini Cooper and a Prius. And because I work at home. And because some of the mutual funds I own contain a fair amount of Exxon Mobil stock. And because I'm brave enough to ignore the manufacturer's suggestion to use high-octane gas.

Cheap gas is unfair. Driving creates huge social costs in the form of traffic, health-damaging pollution and global warming that aren't suffered solely by the person buying the gasoline. Governments usually set up idiotic systems to offset such social costs (emissions trading, ethanol subsidies, taco truck regulations) instead of forcing individuals to pay for their own mess by adding a tax to remedy the imbalance. That kind of tax -- the most fair kind, really -- is called a Pigovian tax, and its use is why gas costs $8 to $10 a gallon in Europe, where they have fewer road deaths even though they drive like complete idiots.

Sure, $8 gas is unfair to poor people, but so is all of capitalism. Rich people get more of the globe's resources. No one has a right to cheap gas any more than he has a right to other things needed for a full and productive life, like an iPhone or a weekly newspaper column where you can tick people off.

We spent 50 years using government money to build the freeways that led to the driving-centric, mall-rat lifestyle I grew up with, so it will surely take decades more to restructure our society into something better. And as bummed as I am to pay a lot for gas, it's a fair price for improving society. I also think government should look into some kind of heavy taxation on Facebook usage.

Quotes of the day

If a stock goes down 50%, I'd look forward to it. In fact, I would offer you a significant sum of money if you could give me the opportunity for all of my stocks to go down 50% over the next month.--Warren Buffett

Using comprehensive data on natural disasters, government spending, and election returns, I show that voters reward disaster relief spending but not disaster prevention spending. This aspect of voter behavior creates a large distortion in the incentives that governments face, since the data show that prevention spending substantially reduces future damage.--Andrew Healy

That seems like a pretty sensible drilling strategy: a Swedish company make a major discovery of oil in July, and it plans to start drilling in just TWO MONTHS. Compare that to the U.S. strategy - discover major deposits of crude oil in ANWR in 1987, and ban drilling for more than TWO DECADES.--Mark Perry

May I really carry it inside my home without a license, just as if I were a free citizen in a country that respects individual liberty? I am overcome with gratitude, really overwhelmed with the state's generosity . . . permission to cry, sir?--Megan McArdle

Graph of the day

at Felix Salmon's:

He writes:

Since 2000, bank deposits have grown from just under $4 trillion to just over $7 trillion: that's an increase of $3 trillion, or $30,000 per household. And this during a time of record-low savings rates and soaring household debt ... And maybe the next time someone asks George Bush to defend his economic record, he might do well to ask them how much money they have in their bank account today, compared to when he took office. Judging by this chart, there's a very good chance the number will have risen substantially.

at Chris Masse's:

Felix Salmon gives Dan Gross a good spank

which the latter seems to really need:

Here's Gross:

Until this week, the cost of this benefit has been effectively nothing--save for some foregone taxes and the cost of regulating the companies.

Effectively nothing? The cost of the implicit guarantee is not foregone taxes, it's foregone profits. The US government has essentially been insuring the debt of the GSEs against default, while neglecting to charge any insurance premiums.

And now that the guarantee is explicit rather than implicit, just look what's happened to US sovereign debt:

This is the first time in my career that I truly believe U.S. Treasury bonds sold off on credit concern. By this I mean, the credit of the U.S. Government. Long time readers know I'm not an alarmist type, and I'm sure not saying the United States is going belly up, but credit default swaps on the United States of America moved 11bps wider today (from 9bps to 20bps). The 10-year Treasury moved 15bps higher. All on a day when people are scared shitless and there should have been strong demand for "risk-free" assets.

That's a real cost, Dan. It might not be a line item in any GSE bailout, but when the US has to pay more money to roll over its trillions of dollars in liabilities, every basis point counts.

If it worked with Hillary Clinton

it might just work with John McCain, too (via Glenn Reynolds):

Stem-cell research and nuclear weapons are just two examples of a surprising but little-noticed aspect of the 2008 campaign: Democrat Obama and Republican McCain agree on a range of issues that have divided the parties under Bush.

On immigration, faith-based social services, expanded government wiretapping, global warming and more, Obama and McCain have arrived at similar stances -- even as they have spent weeks trying to amplify the differences between them on other issues, such as healthcare and taxes.

Even on Iraq, a signature issue for both candidates, McCain and Obama have edged toward each other.

The All Star game is upon us

DISCLOSURE: I am long MLB.NLvAL.AL

Here are the starting lineups:

American League
1. Ichiro Suzuki, RF, Mariners
2. Derek Jeter, SS, Yankees
3. Josh Hamilton, CF, Rangers
4. Alex Rodriguez, 3B, Yankees
5. Manny Ramirez, LF, Red Sox
6. Milton Bradley, DH, Rangers
7. Kevin Youkilis, 1B, Red Sox
8. Joe Mauer, C, Twins
9. Dustin Pedroia, 2B, Red Sox

Cliff Lee, Indians -- Starting pitcher

National League
1. Hanley Ramirez, SS, Marlins
2. Chase Utley, 2B, Phillies
3. Lance Berkman, 1B, Astros
4. Albert Pujols, DH, Cardinals
5. Chipper Jones, 3B, Braves
6. Matt Holliday, RF, Rockies
7. Ryan Braun, LF, Brewers
8. Kosuke Fukudome, CF, Cubs
9. Geovany Soto, C, Cubs

Ben Sheets -- Starting pitcher

Chris Masse spots references to Intrade prices for Obama at the WSJ and NYT

Nice catches, Chris!

Graph of the day

from Mark Perry:

Over the weekend I heard from some family friends that their oldest son, who is graduating out of a strong state computer engineering program, turned down an offer for $250,000 per year (so he could start his own company).

Unintended consequences

China's One-Child Policy leading to doubling of crime rates:

When the Chinese government instituted the policy in 1979, it touched off a wave of sex-selective abortions as pregnant couples decided that if they could have only one child they would benefit most from having a boy. That helped leave modern China with the largest gender imbalance in the world. Today, there are 37 million more men than women in China, and many of the boys are growing up unable to find a job or start a family.

In spite of the current stock market misery

there are a few positive glints:

1) The greater the pessimism, the greater the value.

2) US GDP growth is hard to beat.

Greg Mankiw, GSE prophet

He called this Fannie/Freddie debacle back in 2003:

A small misstep in the risk management programs at Fannie Mae and Freddie Mac could have repercussions for other financial institutions.

Arnold Kling gives Brad DeLong a good spank

which the latter really seems to need:

Over at Grasping Demagoguery with Both Hands, Brad DeLong writes,

Fannie's and Freddie's troubles make it more and more clear that the financial-market deregulation agenda of the late 1990s that Phil Gramm spearheaded was a more serious mistake than almost of any of us realized back at the time...

Let me give Professor DeLong an assignment. Find a list of all of the prominent calls for regulation of Freddie Mac and Fannie Mae over the last 15 years. Then write the name of the political party or the publication who called for that regulation on the blackboard. Do it 100 times. It will help your penmanship. It might even help your grasp on reality.

Quotes of the day

In any case, it does not help for Congressfolks to complain about "reckless lending" on the one hand and complain about "under-served borrowers" on the other. Today's under-served borrower is tomorrow's reckless loan. The scariest mortgage-market amateurs in the whole system are our elected legislators. That is what makes the government-sponsored enterprise model inherently unstable and unwise.--Arnold Kling

... wouldn't T. Boone Pickens' "greatest transfer of wealth in the history of mankind" be a transfer of wealth in the form of valuable natural resources (oil) TO the United States, and not a transfer of wealth FROM the United States in the form of paper currency?--Mark Perry

Why is that liberals want to test everything -- lead levels, stockbroker emails, etc -- except the performance of government workers -- e.g., teachers?--Mick Danger

When an environmental group formed for the sole purpose of opposing offshore oil drilling warmly embraces a plan to drill off its own coast, you know something important has changed in our culture: Americans have recognized that offshore oil drilling is largely safe.--Andrew Cline

Women do not find it difficult nowadays to behave like men, but they often find it extremely difficult to behave like gentlemen.--Sir Compton MacKenzie

Treasury Secretary's GSE remarks translated

by Felix Salmon. Here's a sample:

Paulson: GSE debt is held by financial institutions around the world. Its continued strength is important to maintaining confidence and stability in our financial system and our financial markets. Therefore we must take steps to address the current situation as we move to a stronger regulatory structure.

Translation: China and other major foreign investors hold a huge amount of Agency debt, on the understanding that it's risk-free. I'm here to tell them that, yes, it's risk free. Nothing to worry about here. And to prove that there's nothing to worry about, I'll put out a press release on a Sunday night which is designed to reassure you all. There, you're reassured, right?

Austan Goolsbee

Obama's senior economic adviser, could use some prediction markets:

On November 11, 2007, he published a column in the New York Times citing research by an MIT professor to conclude “that the bond market - which, historically, has often been an early indicator of the demise of a political system - was pessimistic about the Iraqi government’s chances for survival.” The evidence for this was the fact that Iraq’s dollar-denominated bonds were trading at a huge discount from their face value.

Goolsbee went on to praise “the prescience of financial markets.” Only in this case they haven’t turned out to be so prescient after all. The surge, as we know, has succeeded spectacularly. As a result the risk premium on Iraq’s bonds has fallen from nearly 7.0% in August 2007 to around 4.8% last month. Citigroup even released a research note in April which, according to Reuters, concluded that “Iraq is proving an oasis for investors battered by global financial turmoil” and that the “cost of insuring Iraq’s bonds against default has fallen so sharply that they now costs less to insure than Venezuelan debt.”

Not surprisingly there has not been a word about the improvement in outlook for Iraq’s bonds from Professor Goolsbee or the New York Times.

Quote of the day

The major concern about private charities and foundations is not that they are too large, but that their leaders often perpetuate their organizations beyond any reasonable duration, partly by transforming their goals over time. I believe a case can be made for keeping the tax exemption in place, but changing present laws to require charities and foundations to have limited durations, perhaps 30 years. That is, to introduce a kind of sunset provision for private charities and foundations. If they stayed in business beyond that time period, they would then be subject to significant wealth and income taxes.--Gary Becker

Champion of the poor

is actually keeping several rent-controlled apartments for himself.

UPDATE: Mark Perry has pictures.

Some folks should not run relay

because they can't let go of the baton:

In a Father's Day speech, Obama told black churchgoers that a father's responsibility "doesn't just end at conception."

"What makes you a man is not the ability to have a child - any fool can have a child," Obama said. "It's the courage to raise a child that makes you a father."

Maybe this struck a little too close to home for the Rev. Jackson, who just a few years ago finally owned up to fathering a child outside of his marriage even as he was busy counseling President Bill Clinton on his dalliances with a White House intern.

Perhaps the real reason for Jackson's hatred is that Obama has shown that unifying and uplifting campaigns succeed in American politics where the divisive failed campaigns waged by Jackson become history's footnotes.

And this is where Obama comes out ahead once all the dust settles.

By publicly accepting Jackson's apology, Obama floated above the whole sordid mess.

Quotes of the day

Whether General Motors was truly done in by its worker benefits is debatable, as Mark Thoma points out. But if making extravagant commitments on pensions and health care can get you in trouble, I can think of an organization a lot bigger than General Motors to worry about.--Arnold Kling

... anyone living in a wealthy society owes their prosperity at least as much to the wealthy society as they do to their own skill and hard work--and if you doubt this is true, I suggest you go try to deploy your rugged individualist talents in Zimbabwe.--Megan McArdle

Graph of the day

from the Economist (via Mark Perry):

I could not help but notice all the relatively wealthy regions could each trace their economic heritage back to the Scottish Enlightenment.

Cav's stock market sentiment

As I warned last month, the market could retest March lows, and this week it's happened and then some.

The financial sector was once the largest slice of the large caps, and now it's only worth half of last year's value. It could fall quite a bit from here, as the credit crunch is still not over, but I continue to hypothesize that financials cannot infect the overall economy as much as some doomsayers predict. For instance, if financials halve again from here, it's ever-smaller weighting relative to the other sectors, and will have a proportionately dwindled impact.

I'm bullish on non-financials, but expecting the market to sell off further. Investors are too worried.

The case for private and against government solutions: Fannie Mae & Freddie Mac

Markets fail, as do institutions in the private sector. However, public sector solutions are much bigger disasters:

What Americans need to know is how damaging such a failure would be. This wouldn't merely be a matter of the Federal Reserve guaranteeing $29 billion in dodgy mortgage paper, a la Bear Stearns. Fannie and Freddie are among the largest financial companies in the world. Their liabilities – mortgage-backed securities (MBSs) and other debt – add up to some $5 trillion.

To put that in perspective, consider that total U.S. federal debt is about $9.5 trillion, compared to a total U.S. GDP of $14 trillion. About $5.3 trillion of that debt is held by the public (in the form of Treasury bonds and the like), while $4.2 trillion is intragovernment debt such as Social Security IOUs. This is the liability side of America's federal balance sheet, and its condition influences how much the government can borrow and at what rates.

The liabilities of Fan and Fred are currently not on this U.S. balance sheet. But one danger is a run on the debt of either company, putting pressure on the Treasury and Federal Reserve to publicly guarantee that debt to prevent a systemic financial collapse. In an instant, what has long been an implicit taxpayer guarantee for both companies would be made explicit – committing American taxpayers to honoring as much as $5 trillion in new liabilities. U.S. debt held by the public would more than double, and the national balance sheet would look very ugly.

Why is there so little Washington or Wall Street alarm about this? Because the politicians and financiers are part of the consensus that has long promoted the growth of Fannie and Freddie. Congress created the companies to spur home ownership and, in return, got an endless stream of campaign contributions and election support. Beltway elites like James Johnson and Jamie Gorelick made tens of millions working there. Wall Street marketed their MBSs to buyers around the world, pitching them as virtually as safe as Treasurys (due to the implicit taxpayer guarantee) but with a higher return. Everybody made a bundle.

The assumption was that the taxpayer guarantee would never have to be honored, just as everyone before the savings and loan debacle thought deposit insurance would rarely have to be paid. But these political bills always come due.

The double irony amid the current credit crunch is that our politicians have been promoting Fannie and Freddie as mortgage saviors even as their risk of insolvency has grown. Chuck Schumer, Chris Dodd and many others have encouraged the duo to take on even greater mortgage risk as the housing slump has unfolded. They're the arsonists posing as firemen while putting more dry tinder around the blaze.

My addendum to this is, why do we have LESS transparency with government agencies in regards to their balance sheets and revenue activities than public corporations, when it should be the opposite?!?

UPDATE: More from Arnold.

Pickens' Energy Plan

My plan calls for taking the energy generated by wind and using it to replace a significant percentage of the natural gas that is now being used to fuel our power plants. Today, natural gas accounts for about 22% of our electricity generation in the U.S. We can use new wind capacity to free up the natural gas for use as a transportation fuel. That would displace more than one-third of our foreign oil imports. Natural gas is the only domestic energy of size that can be used to replace oil used for transportation, and it is abundant in the U.S. It is cheap and it is clean. With eight million natural-gas-powered vehicles on the road world-wide, the technology already exists to rapidly build out fleets of trucks, buses and even cars using natural gas as a fuel. Of these eight million vehicles, the U.S. has a paltry 150,000 right now. We can and should do so much more to build our fleet of natural-gas-powered vehicles.

I applaud T. Boone's vision and leadership, but even though wind is free and natural gas is much cheaper than oil, there are other economic realities that I think are being ignored. The natural gas infrastructure needs to move to liquified natural gas, which represents a huge capital investment. And for even 10 million U.S. households to replace their current cars with nat gas vehicles represents about $1-2 trillion, much of which could go to foreign car manufacturers.

The variable (operating, transmission, and maintenance) costs of wind generated power are actually comparable to current conventional generation. The cap ex for new wind infrastructure presents a significant cost.

Some interesting information on the failed Climate Security Act

and related interest groups donating to Obama and McCain:

This graph shows the total campaign contributions received by each senator from interests who supported the bill and those who opposed the bill.

A round up of prediction market advocates and their CFTC comments

at Midas Oracle.

Am I a feminist?

Some might say yes; probably more would say no. I'm not sure I really care. But in any case, I find myself in much agreement with Camille Paglia (upon whom the label also inspires much debate):

First of all, science must be made a fundamental component of all women’s or gender studies programs. Second, every such program must be assessed by qualified faculty (not administrators or politicians) for ideological bias. The writings of conservative opponents of feminism, as well as of dissident feminists, must be included. Without such diversity, students are getting indoctrination, not education. Certainly among current dissident points of view is the abstinence movement, as an evangelical Protestant phenomenon and also as an argument set forth in Wendy Shalit’s first book, A Return to Modesty, which created a storm when it was published nine years ago but whose influence can be detected in today’s campus chastity clubs, including here at Harvard. As a veteran of pro-sex feminism who still endorses pornography and prostitution, I say more power to all these chaste young women who are defending their individuality and defying groupthink and social convention. That is true feminism!

My final recommendation for reform is a massive rollback of the paternalistic system of grievance committees and other meddlesome bureaucratic contrivances which have turned American college campuses into womblike customer-service resorts. The feminists of my baby-boom generation fought to tear down the intrusive in loco parentis rules that insultingly confined women in their dormitories at night. College administrators and academic committees have no competence whatever to investigate crimes, including sexual assault. If an offense has been committed, it should be reported to the police, so that the civil liberties of both the accuser and the accused can be protected. This is not to absolve young men from their duty to behave honorably. Hooliganism cannot be tolerated. But we must stop seeing everything in life through the narrow lens of gender. If women expect equal treatment in society, they must stop asking for infantilizing special protections. With freedom comes personal responsibility.

She does claim to be a free-speech libertarian and believes the Constitution to be more than a punchline, so perhaps that explains much of our agreement.

Quotes of the day

Obama isn't responsible for the behavior of every single person he has met, worked with, or been supported by in his political rise. By that standard, the Clintons would never have made it out of Little Rock. They attract shady like lint.--Camille Paglia

Freedom is not empowerment. Empowerment is what the Serbs have in Bosnia. Anybody can grab a gun and be empowered. It's not entitlement. An entitlement is what people on welfare get, and how free are they? It's not an endlessly expanding list of rights— the "right" to education, the "right" to food and housing. That's not freedom, that's dependency. Those aren't rights, those are the rations of slavery— hay and a barn for human cattle. There is only one basic human right, the right to do as you damn well please. And with it comes the only basic human duty, the duty to take the consequences.--P.J. O'Rourke

YouTube of the day

or perhaps of the last 3 decades (via Steve Bainbridge). Maybe the best 2 minutes of your day.

Obama's plan to enslave students

here.

Quotes of the day

Imagine buying cars the way we buy governments. Ten thousand people would get together and agree to vote, each for the car he preferred. Whichever car won, each of the ten thousand would have to buy it. It would not pay any of us to make any serious effort to find out which car is best; whatever I decide, my car is being picked for me by the other members of the group. Under such institutions, the quality of cars would quickly decline.--David Friedman

It strikes me, and it probably struck Friedman, that "purist" libertarianism requires the same sort of unanimity that is required by socialism. In either case, we have to all agree on what constitutes a just society.--Arnold Kling

In American culture, we have strippers. Yes, much like the oracles of ancient Greece, we Americans prefer our advice to come from naked women who are probably just really, really high.--Tom Fornelli

Graph of the day

at Felix Salmon's:

Gut check for traders

over at WallStreetJackass.

And this is too good not to check out: NBA or NFL?

Global cooling in 2008 increases in certainty

DISCLOSURE: I am short 2008.GLOBALTEMP.TOP5

UPDATE: 123-year low reached here.

UPDATE: More Antarctic ice, too.

Graphs of the day

from Mark Perry:


There's also this nifty table:

Better late than never

Mao dropped from new China note (via Alex Tabarrok).

Quotes of the day

Let Wall Street have a nightmare and the whole country has to help get them back in bed again.–-Will Rogers

We almost deserve $4 gas. We knew in 1974 that we had a serious issue but we don’t have the political fortitude to do anything about it.--Jamie Dimon

Speculator-bashing is another exercise in scapegoating and grandstanding. Leading politicians either don't understand what's happening or don't want to acknowledge their complicity.--Robert Samuelson

BBC's Flip Flop Guide

for McCain & Obama, here (via Drudge).

Quote of the day

Once you give the government the power to tax things that it calls "negative externalities," it's got an excuse to tax almost anything, and will probably use it eagerly. Personally, I've noticed a near-perfect correlation between stuff that economists think is bad and stuff that they think has negative externalities.

But my fundamental objection is #2 [see below]. And contrary to Mankiw, you don't have to be a believer in small government to take this position. Anyone who thinks that speech should not be taxed no matter how offensive it is takes this position. Anyone who thinks that extremely unpopular religions should not be taxed takes this position. Indeed, if you think that you should be able to marry whoever you like, no matter how much your parents hate them, you don't really belong in the Pigou Club.--Bryan Caplan

#2 You recognize the externalities but you don’t think the government should try to respond to them. You are such a believer in small government that you are willing to live with inferior economic outcomes, such as pollution and congestion.

Guts: Who spoke truth to unethical power?

Ken Langone, Mel Karmazin, and David Komanksy. Not Hank Paulson nor John Reed.

Obama is the one running for Bush's Third Term

Most Presidential candidates adapt their message after they win their party nomination, but Mr. Obama isn't merely "running to the center." He's fleeing from many of his primary positions so markedly and so rapidly that he's embracing a sizable chunk of President Bush's policy. Who would have thought that a Democrat would rehabilitate the much-maligned Bush agenda?

Take the surveillance of foreign terrorists. Last October, while running with the Democratic pack, the Illinois Senator vowed to "support a filibuster of any bill that includes retroactive immunity for telecommunications companies" that assisted in such eavesdropping after 9/11. As recently as February, still running as the liberal favorite against Hillary Clinton, he was one of 29 Democrats who voted against allowing a bipartisan Senate Intelligence Committee reform of surveillance rules even to come to the floor.

Two weeks ago, however, the House passed a bill that is essentially the same as that Senate version, and Mr. Obama now says he supports it. Apparently legal immunity for the telcos is vital for U.S. national security, just as Mr. Bush has claimed. Apparently, too, the legislation isn't an attempt by Dick Cheney to gut the Constitution. Perhaps it is dawning on Mr. Obama that, if he does become President, he'll be responsible for preventing any new terrorist attack. So now he's happy to throw the New York Times under the bus.

Next up for Mr. Obama's political blessing will be Mr. Bush's Iraq policy. Only weeks ago, the Democrat was calling for an immediate and rapid U.S. withdrawal. When General David Petraeus first testified about the surge in September 2007, Mr. Obama was dismissive and skeptical. But with the surge having worked wonders in Iraq, this week Mr. Obama went out of his way to defend General Petraeus against MoveOn.org's attacks in 2007 that he was "General Betray Us." Perhaps he had a late epiphany.

Mr. Obama has also made ostentatious leaps toward Mr. Bush on domestic issues. While he once bid for labor support by pledging a unilateral rewrite of Nafta, the Democrat now says he favors free trade as long as it works for "everybody." His economic aide, Austan Goolsbee, has been liberated from the five-month purdah he endured for telling Canadians that Mr. Obama's protectionism was merely campaign rhetoric. Now that Mr. Obama is in a general election, he can't scare the business community too much.

Back in the day, the first-term Senator also voted against the Supreme Court nominations of John Roberts and Samuel Alito. But last week he agreed with their majority opinion in the Heller gun rights case, and with their dissent against the liberal majority's ruling to ban the death penalty for rape. Mr. Obama seems to appreciate that getting pegged as a cultural lefty is deadly for national Democrats – at least until November.

This week the great Democratic hope even endorsed spending more money on faith-based charities. Apparently, this core plank of Mr. Bush's "compassionate conservatism" is not the assault on church-state separation that the ACLU and liberals have long claimed. And yesterday, Mr. Obama's campaign unveiled an ad asserting his support for welfare reform that "slashed the rolls by 80 percent." Never mind that Mr. Obama has declared multiple times that he opposed the landmark 1996 welfare reform.

All of which prompts a couple of thoughts. The first is that Mr. Obama doesn't seem to think American political sentiment has moved as far left as most of the media claim. Another is that the next President, whether Democrat or Republican, is going to embrace much of Mr. Bush's foreign and antiterror policy whether he admits it or not. Think Eisenhower endorsing Truman's Cold War architecture.

Most important is the matter of Mr. Obama's political character – and how honest he is being about what he truly believes. His voting record in the Senate and in Illinois, as well as his primary positions, would make him the most liberal Presidential candidate since George McGovern in 1972. But he clearly doesn't want voters to believe that in November. He's still the Obama Americans don't know.

John Kerry didn't flip-flop this much.

Politics

as usual?

BCWUW4: Government heathcare

results in more death.

Be Careful What You Wish For.

Andrew Roth is too

funny:

Rep. Pelosi’s bill would subsidize the 600 money-losing Starbucks locations by giving away millions of taxpayer dollars in so-called ‘Venti Vouchers’ to residents of these hard-hit neighborhoods. If the effort fails to revive the flagging stores, Rep. Pelosi said Democrats would “seriously consider nationalizing the coffee industry to ensure the free flow of java at fair prices.

Arctic ice melt slowing

over at Steve McIntyre's.
DISCLOSURE: I am short 2008.GLOBAL.TEMP.TOP5.

Education, productivity, and marriage

Arnold Kling reflects:

... we went from a pattern in which inequality was falling as the average standard of living was rising to a pattern of increasing inequality.

Two questions arise. First, why has education attainment stagnated? Second, why has average productivity growth remained high in the face of this stagnation?

My answer would be assortative marriage. We are dividing into a two-tier society, where the top tier produces children capable of obtaining advanced skills and the bottom tier does not.