How government makes things worse

by Jeff Jacoby (via Mark Perry).

Eliot Spitzer (a.k.a. "Client Nine") involved in prostitution ring

New York Sun reports:

Prosecutors specializing in government corruption cases are leading the investigation into what authorities say was a prostitution service that charged up to $5,500 an hour — suggesting that the U.S. attorney's office in Manhattan may have evidence that a public official hired a prostitute.

During a court hearing in the case, at which the four people were arraigned, it emerged that all three of the assistant U.S. attorneys assigned to the prosecution are part of the U.S. attorney's public corruption unit. One is the bureau's chief, Boyd Johnson III. The unit investigates wrongdoing by both elected and nonelected officials and bureaucrats at various levels of government.

NY Times reports:

Gov. Eliot Spitzer has informed his most senior administration officials that he had been involved in a prostitution ring, an administration official said this morning.

Those who live by the pen, die by the pen, I guess.

UPDATE: Kimberly Strassel's "The Passion of Spitzer" was predictive (via Larry Ribstein):

Mr. Spitzer's office has clearly spun his verbal tirades as mere differences in recollection, and since most took place in private, he's so far received the benefit of the doubt. But in other instances -- Mr. Grasso, H&R Block and Mr. Greenberg -- there are disturbing suggestions that Mr. Spitzer is peddling information to the public that may not be accurate. You can bet that if this were President Bush, the press would be all over the disparate versions of events. But this is Mr. Spitzer, who at this very moment is running campaign ads that are nothing more than a compilation of the adulatory headlines he's received over his tenure.

Far better for the public if a little more light were directed on these discrepancies. Mr. Spitzer is asking to govern one of the most populous states in the nation. Politicians are certainly allowed "passion," but given the power they wield they also have to demonstrate restraint, honesty and good judgment. Voters deserve to know if Mr. Spitzer has the character to hold such a job.

Why prop up a dictator?

in today's WSJ:

Even as the Venezuelan strongman was threatening war last week against Colombia, Congress was threatening to hand him a huge strategic victory by spurning Colombia's free trade overtures to the U.S.

This isn't the first time Democrats have come to Mr. Chávez's aid, but it would be the most destructive. The Venezuelan is engaged in a high-stakes competition over the political and economic direction of Latin America. He wants the region to follow his path of ever greater state control of the economy, while assisting U.S. enemies wherever he can. He's already won converts in Bolivia and Ecuador, and he came far too close for American comfort in Mexico's election last year.

Meanwhile, Colombian President Álvaro Uribe is embracing greater economic and political freedom. He has bravely assisted the U.S fight against narco-traffickers, and he now wants to link his country more closely to America with a free-trade accord. As a strategic matter, to reject Colombia's offer now would tell everyone in Latin America that it is far more dangerous to trust America than it is to trash it.

The bottleneck is Speaker Nancy Pelosi, who is refusing to allow a vote under pressure from her left-wing Members. These Democrats deride any link between Hugo Chávez and trade as a "scare tactic," as if greater economic prosperity had no political consequences. "President Bush's recent fear-mongering on trade shows just how desperate he is to deliver one final victory for multinational corporations," declared Illinois Democrat Phil Hare, who is one of Ms. Pelosi's main trade policy deputies.

These are the same Democrats who preach the virtues of "soft power" and diplomacy, while deriding Mr. Bush for being too quick to use military force. But trade is a classic form of soft power that would expand U.S. and Latin ties in a web of commercial interests. More than 8,000 U.S. companies currently export to Colombia, nearly 85% of which are small and medium-sized firms. Colombia is already the largest South American market for U.S. farm products, and the pact would open Colombia to new competition and entrepreneurship.

Which brings us back to Mr. Chávez and his many Democratic friends. Connecticut Senator Chris Dodd's early support helped the strongman consolidate his power. Former President Jimmy Carter blessed Mr. Chávez's August 2004 recall victory, despite evidence of fraud. And then there are the many House Democrats, current and former, who have accepted discount oil from Venezuela and then distributed it in the U.S. to boost their own political fortunes. Joseph P. Kennedy II and Massachusetts Congressman Bill Delahunt have been especially cozy with Venezuela's oil company. If Democrats spurn free trade with Colombia, these Democratic ties with Mr. Chávez will deserve more political scrutiny.

Brian Wesbury does not see a recession looming

as he writes:

As a result, following Friday’s report that private payrolls dropped 101,000 in February (the second consecutive decline), it has become easy to believe that a recession has begun.

However, this would be a significant overreaction. Employment data in the past few months has not changed nearly as much relative to its trend as it did in previous recessions. Moreover, jobs fell in 2002 and early 2003, but the economy still expanded. Demographic patterns have slowed employment growth below historical norms. Consequently, the recent decline in payrolls is not proof that the overall economy is contracting.

The last recession officially ended in November 2001 and since then payrolls have grown by an average of about 100,000 per month. In the past two months payrolls have dropped by an average of 43,000. The total swing is 143,000 and this represents a 1.7 million annual change or 1.2% of the total number of payroll jobs currently in existence. This is a significantly smaller shift than those that occurred in the recessions of 1990-91 or 2001.

Why? Well, one reason is that we may not really be in recession. Swings of 100,000 per month in jobs are barely above the level of statistical significance. Another reason is that we have seen a major shift in demographic factors.

Unlike the expansions of the 1980s or 1990s, the current one is the first to be affected by the aging of Baby Boomers beyond their peak working years. At the same time, the current expansion has seen much higher college enrollment rates for young people, while labor force participation by students has fallen. As a result, the trend growth in payrolls has been understandably lower. (Making up for this has been a strong increase in productivity, outdoing the expansions of the 1980s and 1990s.)

How can the economy still grow if payrolls are shrinking? The answer is productivity growth: more output per hour worked. For an historical example, we need look no further back than 2002 and the first half of 2003. During that 18-month period, payrolls declined by an average of 50,000 jobs per month (worse than the average in the past two months) while real GDP expanded at a 2% annual rate (matching our forecast for Q1).

DISCLOSURE: I am short US.RECESSION.08

Intra-party litigation

Al Sharpton mulls a Florida lawsuit (via Drudge).

Ted Olson's litigation prediction from last month here.

The first team to clinch a Men's NCAA Baasketball berth

is Cornell.

Let's Go Red!

Trade of the Year

brought by Eddy Elfenbein. Unfortunately, like most great trades, it's a look-back.

DISCLOSURE: Unfortunately, I am short 2008.GOP.NOM.MCCAIN

Quote of the day

The western financial system is caught in a trap. On the one hand, there is an urgent need for clearing prices to be established for impaired assets to restore confidence; on the other hand, if this is done in a mark-to-market world, there is a risk that some banks will run out of capital. Policymakers are in the unenviable position of knowing almost any step they take risks denting sentiment further.--Gillian Tett

Echoes of Elvis:

We're caught in a trap
I can't walk out
Why can't you see
What you're doing to me
When you don't believe a word I say?

We can't go on together
With suspicious minds
And we can't build our dreams
On suspicious minds

Here we go again
Asking where I've been
You cant see these tears are real
I'm crying

Let's don't let a good thing die

When honey, you know
I've never lied to you

Back in January, I guessed that we were in the 8th inning of the stock market correction, and 4th inning of the credit crunch. I'm thinking that we might be in the 9th inning and 5th inning now, respectively.

UPDATE: The Subprime Wisdom of Megadeath:

Foreclosure of a dream
Those visions never seen
Until all is lost
Personal Holocaust
Foreclosure of a dream

The Ethanol Mess

at MIT's Technology Review (via Steve Levitt).

This is very bad

except for school boards, teachers unions, and the politicians they support.

Oh, I didn't know about this rule of politics

A gaffe is when a politician tells the truth.--Michael Kinsley

A tiny point of light, amidst the chaotic darkness this week

Here is some good news from a recent paper by Harvard economist Andrei Shleifer titled "The Age of Milton Friedman":

The last quarter century has witnessed remarkable progress of mankind. The world’s per capita inflation-adjusted income rose from $5,400 in 1980 to $8,500 in 2005 (see chart above). Schooling and life expectancy grew rapidly, while infant mortality and poverty fell just as fast. With the conspicuous exceptions of China and the Middle East, the world has made significant strides in democratization. Compared to 1980, many more countries in the world are democratic today.

We’ve seen remarkable declines in infant mortality in all regions, with the worldwide population-weighted average dropping from 64.5 to 37.5 per thousand births. The World Bank reports that between 1980 and 2000, the share of the world’s population living on less than $1 a day fell from 34.8 percent to 19 percent. It forecasts that the number of people living on less than $1 a day will continue to fall sharply despite population growth, and account for 10 percent of the world’s population by 2015. Billions of people in Asia have been lifted out of poverty thanks to economic growth.

(via Mark Perry)

John Carney accuses Math of sexism

here:

Math 55 is advertised in the Harvard catalog as “prob­ably the most difficult undergraduate math class in the country.” It is leg­endary among high school math prodigies, who hear terrifying stories about it in their computer camps and at the Math Olympiads. Some go to Harvard just to have the opportunity to enroll in it. Its formal title is “Honors Advanced Calculus and Linear Algebra,” but it is also known as “math boot camp” and “a cult.” The two-semester fresh­man course meets for three hours a week, but, as the catalog says, homework for the class takes between 24 and 60 hours a week.

Math 55 does not look like America. Each year as many as 50 students sign up, but at least half drop out within a few weeks. As one former student told The Crimson newspaper in 2006, “We had 51 students the first day, 31 students the second day, 24 for the next four days, 23 for two more weeks, and then 21 for the rest of the first semester.” Said another student, “I guess you can say it’s an episode of ‘Survivor’ with people voting themselves off.” The final class roster, according to The Crimson: “45 percent Jewish, 18 percent Asian, 100 percent male.”

I fondly reminisce about my freshman weed-out course, Chem 207. All the pre-med hopefuls and engineering frosh converged in Baker Lab for the lectures and "prelims" (major exams before the final exam), to try to finish in the top 16% of the class and get that 3.5 or higher mark for the class.

It was so stressful for we 18-year-olds that they actually had Ithaca police cruisers on watch over the Stewart Avenue and Collegetown bridges for gorge jumpers, after we were done with those tests.

Half the class--on the bottom half of the bell curve--got stuck with a 0.0 - 2.5 grade, and most of those had to get out of the pre-med or engineering track by their sophomore year. Fortunately, one could always bake some cookies, toss some salad for a 4.0. That, or clean out barns/stalls/kennels. Just kidding, those 2 schools are the best in breed in the country, unlike my school which barely cracks the top 10.

Of course, I would bet serious money that we could take Georgia Tech, Urbana-Champaign, USC and UMich in a brawl measured by problem sets, experiments, projects, or pay. The Ithaca of NY is not so much like the Ithaca of Greece; from October to April, it's positively Spartan.

And there were plenty of women who flourished and are physicians today. Probably ten for every female engineering graduate.

Bad Moon Rising: 2008 Recession Contract

odds jumped in the last 24 hours:



DISCLOSURE: I am short US.RECESSION.08

Q. How can the payroll data be negative simultaenously with a reduction in the unemployment rate?

A. Because they are distinctly different surveys. The payroll survey polls a set of employers, while the unemployment rate is derived from a survey of households.

That is why the payroll survey has shown 63,000 jobs lost, while the unemployment rate has dropped from 4.9% to 4.8%. A bear would say the unemployment rate is less credible (due to a higher statistical margin of error), while a bull would assume the payroll data to be unrepresentative, as it does not reflect small business (which is where most people work). In recent years, payroll numbers have had to be revised up. Way up, actually.

You are free to research further and decide. James Surowiecki has recently written a great primer.

Global warming skeptics suffering from "sheer madness"

according to someone who may be genetic-diversity challenged (via Drudge).

I'm sure folks that he trusts will catch up with the latest data (follow the links on "told", "you", "so"). Might take a few years, though, for staffers of royalty--I think they are hired to make the boss feel smart, not simple.

Is this better or worse?

French women 'are the sexual predators now'.

(via Drudge)

I didn't know McCain and Obama were pen pals

Dear Senator Obama:

I would like to apologize to you for assuming that your private assurances to me regarding your desire to cooperate in our efforts to negotiate bipartisan lobbying reform legislation were sincere. When you approached me and insisted that despite your leadership's preference to use the issue to gain a political advantage in the 2006 elections, you were personally committed to achieving a result that would reflect credit on the entire Senate and offer the country a better example of political leadership, I concluded your professed concern for the institution and the public interest was genuine and admirable. Thank you for disabusing me of such notions with your letter to me dated February 2, 2006, which explained your decision to withdraw from our bipartisan discussions. I’m embarrassed to admit that after all these years in politics I failed to interpret your previous assurances as typical rhetorical gloss routinely used in politics to make self-interested partisan posturing appear more noble. Again, sorry for the confusion, but please be assured I won't make the same mistake again....

From McCain's senate website (via Perry Eidelbus).

Is this the dunk of the NBA season?

(via Brett Edwards)

Quote of the day

It was one of the worst nights of my life when I told my dad I was dropping out of Yale to be a cabbie. But I’m making a lot more money driving than being a medieval historian. People get hung up on the word Yale and the word taxi. It’s kind of like jazz—either you get it or you don’t.--Anonymous, via John Carney