At least one economist has shown the good sense and sobriety to avoid the gormless and groundless “Be Optimistic!” mindset that seems to permeate not only his profession but the entire public discussion. David Blitzer, chairman of the Index Committee at S&P, was quoted in today’s (i.e., Wednesday, 3/30/11’s) Wall Street Journal on the housing market:
“January brings us weakening home prices with no real hope in sight for the near future. The housing market recession is not yet over, and none of the statistics are (sic) indicating any form of sustained recovery…At worst, the feared double-dip recession may be materializing.”
Other than the words “at worst” and “may,” I like the way Mr. Blitzer thinks.
Housing will not be back for a long, long time. Yes, incomes may come back, but the problem with housing was that its price grew to levels that completely severed the traditional ties between income and home prices. These traditional, staid, stodgy ratios were not only broken, but became the object of hearty derision by the cognoscenti who did so much to get us into the soup from which we are currently supposedly emerging, because the nation’s (the world’s, really) financial industry engaged in lending that can only be described as insane, confident that they could calibrate the risk and pass it on to “investors” equally confident in their ability to assess risks they had no capability to understand. Unless we are willing, as a matter of public policy, to encourage such irresponsible lending and, by extension, force the taxpayers, or the money fabricators at the Fed, to once again bail out those who engage in such imbecility, housing will not be back for a long time.
What we have to ask ourselves is whether a housing market that takes years and years to return to its former levels is such a bad thing. The deep thinkers, of course, have answered that question; it is, to them, an unequivocally bad thing. We must get housing back, we are told, in order to restore construction jobs and to provide “homeowners” with a piggy-bank that they can use as a mechanism to drive themselves to financial ruin. Overinvestment in housing for reasons having little to do with economics is a good thing, you see.
It looks like the advocates of “affordable housing” may have their way. Our Congress is currently considering methods by which to restore some sanity to housing finance by requiring banks to retain 5% of the risk for loans they bundle and sell. Banks could escape this requirement if they require, among other things, (horrors!) 20% down payments on loans they bundle and sell. Such loans, commonplace when museum pieces like yours truly were buying their homes, are referred to as “gold-standard residential mortgages,” in accordance, one supposes, with the diluting and dumbing down of everything else in our society.
One would not think that a 20% down payment is all that onerous, but one would be incorrect. Already, such notables as Jerry Howard, president of the completely unconflicted National Association of Home Builders, complains that asking people to actually put some money into their homes is the equivalent of “creating a nation of haves and have-nots when it comes to housing.” Equally insightful Senator Kay Hagen (D., NC) wails that “A rigid 20% down payment requirement is going to unnecessarily prevent the middle class, first-time home buyers from getting affordable mortgages.”
One has to admit that both Mr. Howard and Ms. Hagen are right. Requiring a “rigid” (one of those adjectives that has now assumed a connotation similar to that previously reserved for terms like “street walking” or “cross dressing”) 20% down payment will result in a system where those who have the money will be able to buy homes while those who don’t have the money will not be able to buy homes. And such an onerous burden will indeed prevent middle class, first time home buyers who cannot afford homes from buying homes. We are supposed to, of course, consider this a bad thing. Wouldn’t want to be rigid, would we?
Wednesday, March 30, 2011
Monday, March 28, 2011
HEY, THE BOYS NEED A LITTLE LUNCH MONEY…
Yesterday’s (i.e., Sunday, 3/27’s, page A4) Chicago Tribune reported that Mayor-elect Rahm Emanuel has asked the MacArthur, Joyce, McCormick, and Spencer foundations to come up with a total of $200,000 to finance the transition (?) from the Daley administration to an Emanuel administration. These foundations have willingly complied, opening their checkbooks for a reason, one imagines, their founders could not have envisioned. Mr. Emanuel’s minions, when asked, defended this “request” by pointing out that Mr. Emanuel has already reached out (doubtless the words they used, though I didn’t see a quote containing them) to the business community (ditto) for money for his campaign and for the war chest he has assembled to influence City Council elections. Even Mr. Emanuel, who made his bones asking people for money so that his friends could avoid getting real jobs, is not so shameless as to ask people for gobs of spondulicks three times in a 12 month span. Further, the Emanuel team points out, the city has no money to pay for the transition. One supposes that the reason the city has no money has a lot to do with the quid-pro-quos proffered by the Daley administration for similar “requests” for political money, but I digress.
Those who are uncomfortable with change should thus be reassured that, despite the drivel that Mr. Emanuel delivered, during a campaign funded and sponsored by agents of the status quo, about wanting to deliver change, the era of the shakedown, Chicago style (i.e., usually with nary a peep from, indeed the full acquiescence of, the shakedownees) is alive and well in Chicago. Not only is the Chicago style shakedown still the defining trait of the politics of our town, but the scope of the shakedown has been broadened to, doubtless in Mr. Emanuel’s estimation, a better class of shakedownee. Look for it to be deepened as well.
Oh, the joys of doing business in Chicago!
Those who are uncomfortable with change should thus be reassured that, despite the drivel that Mr. Emanuel delivered, during a campaign funded and sponsored by agents of the status quo, about wanting to deliver change, the era of the shakedown, Chicago style (i.e., usually with nary a peep from, indeed the full acquiescence of, the shakedownees) is alive and well in Chicago. Not only is the Chicago style shakedown still the defining trait of the politics of our town, but the scope of the shakedown has been broadened to, doubtless in Mr. Emanuel’s estimation, a better class of shakedownee. Look for it to be deepened as well.
Oh, the joys of doing business in Chicago!
IT’S NOT A CHICK FLICK; IT’S A ROMANTIC COMEDY
3/28/11
The Wall Street Journal must be having an incredibly difficult time with the war in Libya and one must admit it is entertaining to see the Journal writhe. While the Journal is always delighted to see American troops enforcing American writ anywhere in the world, it vastly prefers to see our shameless interference in the affairs of others and intrepid assaults on the American treasury conducted under Republican presidents. A Democrat doing exactly what the Journal wants? There must be no end to the confusion among the neocon wunderkinds who populate the Journal’s editorial page. So they oppose not the intervention but its conduct, with most of their criticism focusing on the lack of a defined objective and a concern about whom indeed we are helping when we aid the ill-defined Libyan opposition. Somehow, the Journal expressed no such concerns for the oh so clearly defined Bush adventures in Iraq and Afghanistan that had the consequence of creating an entire generation of America haters in vast quarters of the Middle East. Seeing the kids at the Journal hoisted on their own petard is indeed refreshing, but I start with a digression.
The Journal reports this morning the good news, at least according to the Bush/Obama administration, that NATO will be taking command of the entire military intervention, as opposed to just enforcing the no-fly zone, in Libya. (In fairness, I will quickly add that the Journal is not endorsing this takeover; it can’t possibly endorse anything a Democrat, an especially Barack Obama, would do, even, or perhaps especially, if what he does comes right out the neocon playbook.) Doubtless this will be the thrust of the defense that Mr. Obama will deliver tonight of his excellent Middle Eastern adventure: NATO is in charge; we are taking a subordinate role; there should be much rejoicing.
However, a clear thinking person who considers the two parties equally culpable in the mess that the pols have made of American foreign and domestic policy over the last thirty or so years can think of two questions that the NATO assurances should engender. First, what is NATO but a thin veneer for, first, U.S. assuming the military obligations of Europe in, a post-World War II Europe and then a bureaucracy struggling to come up with some justification for its existence in a post Cold War world? To say that NATO is in charge so the Americans aren’t is preposterous; given the relative military capabilities of the United States and all other NATO states, NATO is, for all intents and purposes, the United States.
Second, assuming for a moment that I am incorrect in that last assertion and that NATO is indeed something other than a ruse for U.S. meddling (usually, by the way, with the full approval of the meddlees) in the military and political affairs of Europe, do we really want American troops fighting under anything but American command? Yes, we technically did so in Korea and in the first (the second really, but the first didn’t involve us, but that is grist for another mill) Gulf War, but did anybody really believe that anyone but the Americans were in charge of both efforts?
Maybe this will all work out: Gadhafi will leave the country, the noble Jeffersonian opposition will assume power, and all will be sweetness and light. (Maybe the Cubs will win the World Series.) But the chance (miraculous, really) salubrious outcome of a given endeavor does not justify the effort expended in an ill-conceived pursuit of the ridiculously unlikely.
The Wall Street Journal must be having an incredibly difficult time with the war in Libya and one must admit it is entertaining to see the Journal writhe. While the Journal is always delighted to see American troops enforcing American writ anywhere in the world, it vastly prefers to see our shameless interference in the affairs of others and intrepid assaults on the American treasury conducted under Republican presidents. A Democrat doing exactly what the Journal wants? There must be no end to the confusion among the neocon wunderkinds who populate the Journal’s editorial page. So they oppose not the intervention but its conduct, with most of their criticism focusing on the lack of a defined objective and a concern about whom indeed we are helping when we aid the ill-defined Libyan opposition. Somehow, the Journal expressed no such concerns for the oh so clearly defined Bush adventures in Iraq and Afghanistan that had the consequence of creating an entire generation of America haters in vast quarters of the Middle East. Seeing the kids at the Journal hoisted on their own petard is indeed refreshing, but I start with a digression.
The Journal reports this morning the good news, at least according to the Bush/Obama administration, that NATO will be taking command of the entire military intervention, as opposed to just enforcing the no-fly zone, in Libya. (In fairness, I will quickly add that the Journal is not endorsing this takeover; it can’t possibly endorse anything a Democrat, an especially Barack Obama, would do, even, or perhaps especially, if what he does comes right out the neocon playbook.) Doubtless this will be the thrust of the defense that Mr. Obama will deliver tonight of his excellent Middle Eastern adventure: NATO is in charge; we are taking a subordinate role; there should be much rejoicing.
However, a clear thinking person who considers the two parties equally culpable in the mess that the pols have made of American foreign and domestic policy over the last thirty or so years can think of two questions that the NATO assurances should engender. First, what is NATO but a thin veneer for, first, U.S. assuming the military obligations of Europe in, a post-World War II Europe and then a bureaucracy struggling to come up with some justification for its existence in a post Cold War world? To say that NATO is in charge so the Americans aren’t is preposterous; given the relative military capabilities of the United States and all other NATO states, NATO is, for all intents and purposes, the United States.
Second, assuming for a moment that I am incorrect in that last assertion and that NATO is indeed something other than a ruse for U.S. meddling (usually, by the way, with the full approval of the meddlees) in the military and political affairs of Europe, do we really want American troops fighting under anything but American command? Yes, we technically did so in Korea and in the first (the second really, but the first didn’t involve us, but that is grist for another mill) Gulf War, but did anybody really believe that anyone but the Americans were in charge of both efforts?
Maybe this will all work out: Gadhafi will leave the country, the noble Jeffersonian opposition will assume power, and all will be sweetness and light. (Maybe the Cubs will win the World Series.) But the chance (miraculous, really) salubrious outcome of a given endeavor does not justify the effort expended in an ill-conceived pursuit of the ridiculously unlikely.
Saturday, March 26, 2011
OILY AND OFTEN
3/26/11
When reporters asked State Department Spokesman Mark Toner why the Bush/Obama Administration is supporting the Libyan uprising but ignoring the uprising in Syria, Mr. Toner, in a fit of typical bureaucratic mealy-mouthedness, replied “…what’s happened and what is happening in Libya stands apart.” That Mr. Obama has decided to commit American blood and treasure (Make no mistake about the first.) to Libya establishes that what is happening there “stands apart.” The question is why it stands apart.
Diplomats like to engage in “diplomatic speak,” which is an easier expression to understand than “timid obfuscation.” The Pontificator, as loyal readers know, has little regard for the baloney that floats around the world under the guise of diplomatic speak, and thus can say what the diplomats can’t: the Bush/Obama Administration has wrongly decided to take action in Libya because Libya has lots of oil and Colonel Gadhafi (or however the press is spelling his name today) has few friends. The Bush/Obamaites are correctly not taking action in Syria because Syria has negligible amounts of oil and Bashar al-Assad has one very muscular friend, Iran. It’s as simple as that.
President Obama can talk all he want about the humanitarian disaster his feckless actions have prevented, and there may be something to that; the scale of Colonel Gadhafi’s actions against his opponents has dwarfed that of any of his tin-horn brothers in the fraternity of Middle Eastern thugs, many of whom Messrs. Bush and Obama had no problem with when they were doing the Bush/Obama administration’s bidding, but I digress. The scale argument, however, could quickly evaporate if Mr. al-Assad decides to get more enthusiastic in his response to the protests in the country his father willed him. The question that should concern us is whether, should Mr. al-Assad’s response match the scale and ferocity of that of Mr. Gadhafi, the Bush/Obama administration will draw the opposite conclusion of the one that those of us who are highlighting its hypocrisy are trying to promote and decide that Syria, too, deserves the protection of a “NATO led” no-fly zone and all that will derive from it.
When reporters asked State Department Spokesman Mark Toner why the Bush/Obama Administration is supporting the Libyan uprising but ignoring the uprising in Syria, Mr. Toner, in a fit of typical bureaucratic mealy-mouthedness, replied “…what’s happened and what is happening in Libya stands apart.” That Mr. Obama has decided to commit American blood and treasure (Make no mistake about the first.) to Libya establishes that what is happening there “stands apart.” The question is why it stands apart.
Diplomats like to engage in “diplomatic speak,” which is an easier expression to understand than “timid obfuscation.” The Pontificator, as loyal readers know, has little regard for the baloney that floats around the world under the guise of diplomatic speak, and thus can say what the diplomats can’t: the Bush/Obama Administration has wrongly decided to take action in Libya because Libya has lots of oil and Colonel Gadhafi (or however the press is spelling his name today) has few friends. The Bush/Obamaites are correctly not taking action in Syria because Syria has negligible amounts of oil and Bashar al-Assad has one very muscular friend, Iran. It’s as simple as that.
President Obama can talk all he want about the humanitarian disaster his feckless actions have prevented, and there may be something to that; the scale of Colonel Gadhafi’s actions against his opponents has dwarfed that of any of his tin-horn brothers in the fraternity of Middle Eastern thugs, many of whom Messrs. Bush and Obama had no problem with when they were doing the Bush/Obama administration’s bidding, but I digress. The scale argument, however, could quickly evaporate if Mr. al-Assad decides to get more enthusiastic in his response to the protests in the country his father willed him. The question that should concern us is whether, should Mr. al-Assad’s response match the scale and ferocity of that of Mr. Gadhafi, the Bush/Obama administration will draw the opposite conclusion of the one that those of us who are highlighting its hypocrisy are trying to promote and decide that Syria, too, deserves the protection of a “NATO led” no-fly zone and all that will derive from it.
Friday, March 25, 2011
TAKING THE PLEDGE?
3/25/11
Wednesday night, Portugal’s parliament rejected an austerity package proposed by its auspiciously named Prime Minister Jose Socrates. In the wake of that rejection, as the Wall Street Journal reports, “Portugal is almost certain to need a bailout” from one of the European rescue funds concocted in the wake of the troubles in Greece and Ireland.
Hmm…
Accept austerity, don’t get a bailout. Reject austerity, get a bailout. Talk about perverse incentives!
Mr. Socrates argues that the conditions behind an EU bailout will be far harsher than the austerity package he proposed, and one suspects they will. But how will the EU enforce such conditions or, more properly, will they enforce such conditions? One suspects not simply because the EU has no means of employing such enforcement. Portugal can simply get the bailout by pledging to abide by the conditions and then reject the accompanying austerity when it becomes too tough or when it becomes merely uncomfortable. Then what will the EU do? Let Portugal default, defeating the whole purpose of the bailout mechanisms and possibly taking down not only Spain but the euro itself? So why in the world should the Portuguese accept austerity measures in order to avoid an unenforceable, flaccid package of only theoretically harsher austerity measures?
Optimists, defined as those who consider rejecting reality a virtue, will doubtless point to the examples of Greece and Ireland as success stories for the EU bailout mechanism. Austerity, however, has not been greeted with overwhelming enthusiasm in either corner of Europe occupied by these two financial basket cases; ask the now out of work Fianna Fail parliamentarians or the Greek police charged with keeping peace in the wake of street demonstrations inspired by the rigors of austerity in the cradle of European civilization. One suspects, further, that one has not seen the last, or the limits, of Irish, Greek...or Portuguese…rejection of austerity imposed from Bonn or Paris.
Wednesday night, Portugal’s parliament rejected an austerity package proposed by its auspiciously named Prime Minister Jose Socrates. In the wake of that rejection, as the Wall Street Journal reports, “Portugal is almost certain to need a bailout” from one of the European rescue funds concocted in the wake of the troubles in Greece and Ireland.
Hmm…
Accept austerity, don’t get a bailout. Reject austerity, get a bailout. Talk about perverse incentives!
Mr. Socrates argues that the conditions behind an EU bailout will be far harsher than the austerity package he proposed, and one suspects they will. But how will the EU enforce such conditions or, more properly, will they enforce such conditions? One suspects not simply because the EU has no means of employing such enforcement. Portugal can simply get the bailout by pledging to abide by the conditions and then reject the accompanying austerity when it becomes too tough or when it becomes merely uncomfortable. Then what will the EU do? Let Portugal default, defeating the whole purpose of the bailout mechanisms and possibly taking down not only Spain but the euro itself? So why in the world should the Portuguese accept austerity measures in order to avoid an unenforceable, flaccid package of only theoretically harsher austerity measures?
Optimists, defined as those who consider rejecting reality a virtue, will doubtless point to the examples of Greece and Ireland as success stories for the EU bailout mechanism. Austerity, however, has not been greeted with overwhelming enthusiasm in either corner of Europe occupied by these two financial basket cases; ask the now out of work Fianna Fail parliamentarians or the Greek police charged with keeping peace in the wake of street demonstrations inspired by the rigors of austerity in the cradle of European civilization. One suspects, further, that one has not seen the last, or the limits, of Irish, Greek...or Portuguese…rejection of austerity imposed from Bonn or Paris.
Monday, March 21, 2011
MAYBE IF THE AFRIKA KORPS WERE STILL ROLLING THROUGH TO TOBRUK…
A friend from high school asked my feelings on Libya. My readers might be interested in a redacted version of my answer:
You can probably guess how I feel about Libya; we should have stayed the hell out. It's an internal conflict, it's none of our business, but if the Europeans feel Libya is so important, let them go in there. This is going to turn out to be, at best, another exercise in nation building and/or, at worst, a disaster. The ruination of every empire in history has been imperial overreach, and we are at, or probably well beyond, that point now. My general approach to foreign policy has been enlightened but nonetheless quite strict non-interventionism for years; I'm not about to change now.
You ask why the Chinese and the Russians aren't joining us; I suspect they are not jumping into this quagmire because they are smart and possess a degree of humility and a sense of limits we have yet to achieve. But as the Afghans taught the Russians, they are teaching us, and maybe we’ll learn, but we never seem to learn.
The Libyan imbroglio is yet another case of an arrogant America throwing its weight around, the folly of empire in its dying days. The military, like any bureaucracy, is looking for more to do, America is convinced that only we have the answers and are entitled to tell everyone how to run their countries and affairs, defense contractors throw money at the politicians, "conservatives" equate patriotism with the willingness to go to war, "liberals" cannot bear to see anyone suffer when someone else's money and/or life might prove ameliorative, and this is the result.
God help us.
You can probably guess how I feel about Libya; we should have stayed the hell out. It's an internal conflict, it's none of our business, but if the Europeans feel Libya is so important, let them go in there. This is going to turn out to be, at best, another exercise in nation building and/or, at worst, a disaster. The ruination of every empire in history has been imperial overreach, and we are at, or probably well beyond, that point now. My general approach to foreign policy has been enlightened but nonetheless quite strict non-interventionism for years; I'm not about to change now.
You ask why the Chinese and the Russians aren't joining us; I suspect they are not jumping into this quagmire because they are smart and possess a degree of humility and a sense of limits we have yet to achieve. But as the Afghans taught the Russians, they are teaching us, and maybe we’ll learn, but we never seem to learn.
The Libyan imbroglio is yet another case of an arrogant America throwing its weight around, the folly of empire in its dying days. The military, like any bureaucracy, is looking for more to do, America is convinced that only we have the answers and are entitled to tell everyone how to run their countries and affairs, defense contractors throw money at the politicians, "conservatives" equate patriotism with the willingness to go to war, "liberals" cannot bear to see anyone suffer when someone else's money and/or life might prove ameliorative, and this is the result.
God help us.
Thursday, March 17, 2011
BUT YOU CAN STILL WISH ME A HAPPY ST. PATRICK’S DAY
3/17/11
Since I don’t, thank God and St. Patrick himself, have the South Side Irish Parade to kick around any more, I may as well take the opportunity to tee off on the whole day, or at least the way we celebrate it in this country.
Why, oh why, have we decided, as a collective “culture,” that a day, a holy day originally designated to honor a holy, courageous and somewhat stern and austere man, became an excuse to make drunken idiots out of ourselves? And why, by extension, have we come to equate being Irish and celebrating our Irishness with getting drunk? Just listen and watch the advertising, look at all the “wink wink” “have a great St. Paddy’s Day” wishes, and just observe Western Avenue and its consanguineous Irish-American thoroughfares throughout the country to learn that we Irish, and Irish Americans, are just a pack of purblind and potvaliant palookas packing away pints in the puerile pursuit of a pathetic manifestation of patriotism for the auld sod. It was summed up well in WBBM Newsradio 78’s coverage of last Saturday’s (last Saturday’s! Can you imagine the St. Patrick’s Day Parade in Chicago taking place on March 12 when Richard J. Daley was mayor? Saints preserve us!) St. Patrick’s Day Parade when the interviewer asked a parade observer what she was going to do after the parade. This deep thinking suburbanite laughingly proclaimed that she was going to be “a little Irish” after the parade. The interviewer chuckled “We can only imagine what that means!” (Wink, wink) Thanks a lot.
As my Irish-American father used to remind me on the numerous opportunities for such admonition I presented him in the wastrel years of my youth, “It doesn’t take any special talent or ability to be a drunken a—hole.” But people have been conditioned, especially on this day, to think that being a drunken a—hole is the only ability my people have developed We don’t consider the legions of ordinary Irish people who have worked hard to raise their families, follow their God, and make their country the Celtic Tiger it once was and could quickly become again. We don’t remember the millions of Irish who left that land to dig the canals, build the railroads, work in the stockyards, and participate in our country’s peculiar form of self-government so that their kids could have a better life than the old country could afford them. We don’t think of (love or hate anybody on this list, you have to admit they were or are all people of accomplishment and intellect who were not most notable for the number of shots and beers they could consumer before, or after regurgitating in the bathroom, if they are lucky enough to make it, of a watering hole on Western Avenue) Dick Daley, Joe Kennedy, Jim Tyree, Eugene O’Neil, Jimmy Cagney, Pat O’Brien, Maureen O’Hara, Eamon DeValera, Michael Collins, St. Brendan, St. Bridget, Art Carney, Georgia O’Keeffe, Gene Kelly, Andrew Jackson, Sister Monica O'Finnegan, Ronald Reagan, Henry Ford, Tom Monaghan, Jack Ford, Walt Disney, Cyrus McCormick, Robert Fulton, William Brennan, Tip O’Neil, F. Scott Fitzgerald, James T. Farrell, Cardinal O’Connor, James Joyce, Edwin O’Connor, Flannery O’Connor, Father Michael O’Keefe, Dick Quinn, Jimmy Breslin, Ben Hogan, Gene Tunney, Jack Dempsey, Audie Murphy, George M. Cohan, Rosemary Clooney, George Clooney, Daniel Patrick Moynihan, or even St. Patrick himself on this day. Instead, we celebrate the Irish and pseudo-Irish whose most salient characteristics are a self-imagined immense capacity for alcohol and an utter lack of shame.
It would be nice to think that the crude portrayal of the Irish and Irish-Americans to which we are especially subjected on this holy day is an insidious media plot perpetrated by outsiders on the noble Celts on both sides of the Atlantic. But when I hear such protestations, I remember a homily delivered by one of my favorite priests, Father Gallagher, who could have come right out of central casting, many years ago at Sacred Heart when I was still young and doing my part to contribute to the negative stereotype that I so heartily protest today. He said that while the Irish like to blame the British for all their problems, we have to admit that it wasn’t only the British who wreaked such havoc on Ireland; the bottle had its role to play as well. Similarly, the asinine image of the Irish portrayed in the popular culture has at least some of its roots in the behavior of many Irish-Americans, disturbingly, of late, among the younger generations, who have bought into the scurrilous notion that to be Irish is to be a besotted bozo. One would think that, with all that is going on in Ireland right now economically and politically, most Irish-Americans would at least make some effort to be aware of the current travails of the auld sod: inter alia, the efforts of Fine Gael and Labor to form a viable government, the impact of the worldwide financial crisis on the only recently emergent Ireland, and the European pressure to have Ireland ditch one of its most business friendly attributes, the 12.5% corporate tax rate that has attracted so much investment to the Emerald Isle. (Perhaps I digress.) But, no, many of our compatriots just ask for another Guinness, or Old Style, sing about how Ireland must be heaven because that’s where mother was born, and start effecting fake brogues that increase in intensity in direct proportion to the volume of alcohol they pour down their never closed gullets.
I am proud to be Irish-American, happy to have roots in the old country but delighted that my ancestors made the decision to get on the boat and come over here. As a people, we have contributed mightily to this country and to the old country. We have a lot of which to be proud. Why do we, and America and perhaps the world insist on celebrating the things of which we should be ashamed?
Since I don’t, thank God and St. Patrick himself, have the South Side Irish Parade to kick around any more, I may as well take the opportunity to tee off on the whole day, or at least the way we celebrate it in this country.
Why, oh why, have we decided, as a collective “culture,” that a day, a holy day originally designated to honor a holy, courageous and somewhat stern and austere man, became an excuse to make drunken idiots out of ourselves? And why, by extension, have we come to equate being Irish and celebrating our Irishness with getting drunk? Just listen and watch the advertising, look at all the “wink wink” “have a great St. Paddy’s Day” wishes, and just observe Western Avenue and its consanguineous Irish-American thoroughfares throughout the country to learn that we Irish, and Irish Americans, are just a pack of purblind and potvaliant palookas packing away pints in the puerile pursuit of a pathetic manifestation of patriotism for the auld sod. It was summed up well in WBBM Newsradio 78’s coverage of last Saturday’s (last Saturday’s! Can you imagine the St. Patrick’s Day Parade in Chicago taking place on March 12 when Richard J. Daley was mayor? Saints preserve us!) St. Patrick’s Day Parade when the interviewer asked a parade observer what she was going to do after the parade. This deep thinking suburbanite laughingly proclaimed that she was going to be “a little Irish” after the parade. The interviewer chuckled “We can only imagine what that means!” (Wink, wink) Thanks a lot.
As my Irish-American father used to remind me on the numerous opportunities for such admonition I presented him in the wastrel years of my youth, “It doesn’t take any special talent or ability to be a drunken a—hole.” But people have been conditioned, especially on this day, to think that being a drunken a—hole is the only ability my people have developed We don’t consider the legions of ordinary Irish people who have worked hard to raise their families, follow their God, and make their country the Celtic Tiger it once was and could quickly become again. We don’t remember the millions of Irish who left that land to dig the canals, build the railroads, work in the stockyards, and participate in our country’s peculiar form of self-government so that their kids could have a better life than the old country could afford them. We don’t think of (love or hate anybody on this list, you have to admit they were or are all people of accomplishment and intellect who were not most notable for the number of shots and beers they could consumer before, or after regurgitating in the bathroom, if they are lucky enough to make it, of a watering hole on Western Avenue) Dick Daley, Joe Kennedy, Jim Tyree, Eugene O’Neil, Jimmy Cagney, Pat O’Brien, Maureen O’Hara, Eamon DeValera, Michael Collins, St. Brendan, St. Bridget, Art Carney, Georgia O’Keeffe, Gene Kelly, Andrew Jackson, Sister Monica O'Finnegan, Ronald Reagan, Henry Ford, Tom Monaghan, Jack Ford, Walt Disney, Cyrus McCormick, Robert Fulton, William Brennan, Tip O’Neil, F. Scott Fitzgerald, James T. Farrell, Cardinal O’Connor, James Joyce, Edwin O’Connor, Flannery O’Connor, Father Michael O’Keefe, Dick Quinn, Jimmy Breslin, Ben Hogan, Gene Tunney, Jack Dempsey, Audie Murphy, George M. Cohan, Rosemary Clooney, George Clooney, Daniel Patrick Moynihan, or even St. Patrick himself on this day. Instead, we celebrate the Irish and pseudo-Irish whose most salient characteristics are a self-imagined immense capacity for alcohol and an utter lack of shame.
It would be nice to think that the crude portrayal of the Irish and Irish-Americans to which we are especially subjected on this holy day is an insidious media plot perpetrated by outsiders on the noble Celts on both sides of the Atlantic. But when I hear such protestations, I remember a homily delivered by one of my favorite priests, Father Gallagher, who could have come right out of central casting, many years ago at Sacred Heart when I was still young and doing my part to contribute to the negative stereotype that I so heartily protest today. He said that while the Irish like to blame the British for all their problems, we have to admit that it wasn’t only the British who wreaked such havoc on Ireland; the bottle had its role to play as well. Similarly, the asinine image of the Irish portrayed in the popular culture has at least some of its roots in the behavior of many Irish-Americans, disturbingly, of late, among the younger generations, who have bought into the scurrilous notion that to be Irish is to be a besotted bozo. One would think that, with all that is going on in Ireland right now economically and politically, most Irish-Americans would at least make some effort to be aware of the current travails of the auld sod: inter alia, the efforts of Fine Gael and Labor to form a viable government, the impact of the worldwide financial crisis on the only recently emergent Ireland, and the European pressure to have Ireland ditch one of its most business friendly attributes, the 12.5% corporate tax rate that has attracted so much investment to the Emerald Isle. (Perhaps I digress.) But, no, many of our compatriots just ask for another Guinness, or Old Style, sing about how Ireland must be heaven because that’s where mother was born, and start effecting fake brogues that increase in intensity in direct proportion to the volume of alcohol they pour down their never closed gullets.
I am proud to be Irish-American, happy to have roots in the old country but delighted that my ancestors made the decision to get on the boat and come over here. As a people, we have contributed mightily to this country and to the old country. We have a lot of which to be proud. Why do we, and America and perhaps the world insist on celebrating the things of which we should be ashamed?
YEN TRADE LOOKS EASY HERE
3/17/11
The action in the yen in the wake of the earthquake/tsunami/nuclear power plant parade of horrors that has befallen that country is fascinating. While there has been plenty of volatility, the direction of the yen has been decidedly up since the chorus of horribles has stricken our closest Pacific friend.
Most attribute the strength of the yen to the repatriation trade as Japanese individuals and companies buy yen to bring the money home for rebuilding or just to sustain life and/or operation or, more properly, the markets act on the belief that Japanese will pursue such a course of action. Apparently, Japanese officials are skeptical of this explanation and, instead, blame the yen’s action on that omnipresent whipping boy “speculation.”
No matter what has led to the yen’s rise (As I write this, the U.S. dollar buys 78.99 yen), I think a terrific shorting opportunity exists for the yen for three reasons:
--The most obvious reason to short the yen is the problems that have befallen that poor nation. Despite the silly talk that rebuilding will provide an economic stimulus for Japan (the broken window fallacy), having ports destroyed, industry shut or slowed down, power supplies delayed or eliminated, and whole industries hobbled cannot be good for one’s economy and, hence, one’s currency.
--The BOJ is flooding Japan with liquidity since the onset of the crisis. Printing currency at prodigious rates does not strengthen that currency.
--As part of its rebuilding effort, one suspects, given Japan’s monetary history, that the BOJ, the Ministry of Finance, and other Japanese government entities involved in such matters will make a concerted effort to weaken the yen in order to give Japanese industry a boost in its recovery.
This is not necessarily a short term prediction, but one would think that the smart money should be betting on a weaker yen in the not too distant future.
The action in the yen in the wake of the earthquake/tsunami/nuclear power plant parade of horrors that has befallen that country is fascinating. While there has been plenty of volatility, the direction of the yen has been decidedly up since the chorus of horribles has stricken our closest Pacific friend.
Most attribute the strength of the yen to the repatriation trade as Japanese individuals and companies buy yen to bring the money home for rebuilding or just to sustain life and/or operation or, more properly, the markets act on the belief that Japanese will pursue such a course of action. Apparently, Japanese officials are skeptical of this explanation and, instead, blame the yen’s action on that omnipresent whipping boy “speculation.”
No matter what has led to the yen’s rise (As I write this, the U.S. dollar buys 78.99 yen), I think a terrific shorting opportunity exists for the yen for three reasons:
--The most obvious reason to short the yen is the problems that have befallen that poor nation. Despite the silly talk that rebuilding will provide an economic stimulus for Japan (the broken window fallacy), having ports destroyed, industry shut or slowed down, power supplies delayed or eliminated, and whole industries hobbled cannot be good for one’s economy and, hence, one’s currency.
--The BOJ is flooding Japan with liquidity since the onset of the crisis. Printing currency at prodigious rates does not strengthen that currency.
--As part of its rebuilding effort, one suspects, given Japan’s monetary history, that the BOJ, the Ministry of Finance, and other Japanese government entities involved in such matters will make a concerted effort to weaken the yen in order to give Japanese industry a boost in its recovery.
This is not necessarily a short term prediction, but one would think that the smart money should be betting on a weaker yen in the not too distant future.
Wednesday, March 16, 2011
I KNOW A COUPLE GOOD BOOKS YOU CAN READ ON THIS SUBJECT…
3/16/11
This morning’s (i.e., Wednesday, 3/16’s, page A2) Wall Street Journal reports that the White House is intensifying its search for the next FBI chief. On the short list, apparently, is none other than U.S. Attorney for the Northern District of Illinois, and bane of crooked politicians in these parts, Patrick Fitzgerald.
Hmm…
Rahm Emanuel leaves the White House chief of staff’s job to run for Mayor of Chicago with the blessing and full hearted, if not full throated, endorsement of the Daley family. Bill Daley replaces Rahm Emanuel as chief of staff. Suddenly, Patrick Fitzgerald, whom just about every pol in this state has been trying to get rid of ever since he was appointed at the suggestion of maverick one term Senator Peter Fitzgerald, is being considered for a big job in Washington.
This, my friends and readers, is the kind of thing that keeps Chicago politics interesting even in this post demise of the ward based Machine era. And if they keep Chicago politics interesting, such machinations make books about Chicago politics, especially The Chairman and The Chairman’s Challenge, by the ever insightful yours truly, compelling reading.
This morning’s (i.e., Wednesday, 3/16’s, page A2) Wall Street Journal reports that the White House is intensifying its search for the next FBI chief. On the short list, apparently, is none other than U.S. Attorney for the Northern District of Illinois, and bane of crooked politicians in these parts, Patrick Fitzgerald.
Hmm…
Rahm Emanuel leaves the White House chief of staff’s job to run for Mayor of Chicago with the blessing and full hearted, if not full throated, endorsement of the Daley family. Bill Daley replaces Rahm Emanuel as chief of staff. Suddenly, Patrick Fitzgerald, whom just about every pol in this state has been trying to get rid of ever since he was appointed at the suggestion of maverick one term Senator Peter Fitzgerald, is being considered for a big job in Washington.
This, my friends and readers, is the kind of thing that keeps Chicago politics interesting even in this post demise of the ward based Machine era. And if they keep Chicago politics interesting, such machinations make books about Chicago politics, especially The Chairman and The Chairman’s Challenge, by the ever insightful yours truly, compelling reading.
Saturday, March 12, 2011
HAIL TO THE ORANGE, HAIL TO THE SIOUX…
3/12/12
Yesterday, the North Dakota Senate voted to require the University of North Dakota to keep its nickname, The Fighting Sioux. The state House has already passed the bill and Governor Jack Dalrymple has indicated he will sign it into law.
I, like many of you, am disheartened by the hypersensitivity and runaway political correctness that has led to the defenestration of numerous venerable college nicknames and, as a proud graduate of that object of Harvard’s undying envy, the University of Illinois, and a fervent fan of Chief Illiniwek, such unabashed silliness hits home. These hebetudinous pursuits of longstanding icons are especially infuriating when one considers that the hyperventilation behind them originates not, primarily, from the native-American community but, rather, from the white, upper class, busybody community with both too much time on its hands and a fervent belief that some self-styled innate moral and intellectual superiority entitles them to dictate how the rest of us should live.
In the case of UND, the efforts to eliminate the Fighting Sioux nickname, efforts that the UND administration vows to continue, are especially fatuous because one struggles to come up with reasons that “Fighting Sioux” is somehow offensive. Would one rather have the “Surrendering Sioux,” the “Yielding Sioux,” the “Timid Sioux,” or the “Pat-a- cake Playing Sioux”? Why wouldn’t one want a proud people portrayed as they were, a nation that was not about to give up, either land or pride, to the greedy designs of the white Europeans without a fight? Or would the politically correct crowd rather just have the Sioux name dropped altogether, to blot out forever remembrance of those original inhabitants of North Dakota?
Clearly, I am almost as much in favor of keeping the Fighting Sioux nickname for UND as I am in favor of rewelcoming Chief Illiniwek and keeping the Fighting Illini, not the, as someone has proposed, the Fighting Farmbots, battling for the national championship in Memorial Stadium and Assembly Hall. However, it is indeed disheartening to see the pols stick their considerable probosces into such, in the great scheme of things, trivial matters as school mascots. Is this something with which the politicians in Bismarck ought to concern themselves? Is there nothing outside the purview of the government? Maybe…if focusing on such jejune matters keeps them diverted from bollixing up things that really matter.
Yesterday, the North Dakota Senate voted to require the University of North Dakota to keep its nickname, The Fighting Sioux. The state House has already passed the bill and Governor Jack Dalrymple has indicated he will sign it into law.
I, like many of you, am disheartened by the hypersensitivity and runaway political correctness that has led to the defenestration of numerous venerable college nicknames and, as a proud graduate of that object of Harvard’s undying envy, the University of Illinois, and a fervent fan of Chief Illiniwek, such unabashed silliness hits home. These hebetudinous pursuits of longstanding icons are especially infuriating when one considers that the hyperventilation behind them originates not, primarily, from the native-American community but, rather, from the white, upper class, busybody community with both too much time on its hands and a fervent belief that some self-styled innate moral and intellectual superiority entitles them to dictate how the rest of us should live.
In the case of UND, the efforts to eliminate the Fighting Sioux nickname, efforts that the UND administration vows to continue, are especially fatuous because one struggles to come up with reasons that “Fighting Sioux” is somehow offensive. Would one rather have the “Surrendering Sioux,” the “Yielding Sioux,” the “Timid Sioux,” or the “Pat-a- cake Playing Sioux”? Why wouldn’t one want a proud people portrayed as they were, a nation that was not about to give up, either land or pride, to the greedy designs of the white Europeans without a fight? Or would the politically correct crowd rather just have the Sioux name dropped altogether, to blot out forever remembrance of those original inhabitants of North Dakota?
Clearly, I am almost as much in favor of keeping the Fighting Sioux nickname for UND as I am in favor of rewelcoming Chief Illiniwek and keeping the Fighting Illini, not the, as someone has proposed, the Fighting Farmbots, battling for the national championship in Memorial Stadium and Assembly Hall. However, it is indeed disheartening to see the pols stick their considerable probosces into such, in the great scheme of things, trivial matters as school mascots. Is this something with which the politicians in Bismarck ought to concern themselves? Is there nothing outside the purview of the government? Maybe…if focusing on such jejune matters keeps them diverted from bollixing up things that really matter.
Thursday, March 10, 2011
WORSHIPING AT THE ALTAR OF THE GREAT GOD “DEMOCRACY”
3/10/11
Reports that clashes between Coptic Christians and Muslims have killed 13 people in Egypt in recent days have confirmed, as if there were any doubt, the prescience, seminality, and perspicacity of my, inter alia, 2/11/11 post on Egypt NEED A LITTLE RAIN ON YOUR PARADE? I’M YOUR MAN!
The Wall Street Journal’s coverage of the Christian/Muslim fighting, along with other travails befalling the democratic paradise the U.S. mainstream media told us to expect in the wake of the swift deposition of Hosni Mubarak, contained two salient quotes. The first was from Mr. Naguib Sawiris, chairman of Orascom Telecom, one of the largest publicly held companies in the Middle East:
“Another 60 days and the economy will go bust.”
But who needs an economy when the hearts of “the people” are in the right place and Uncle Sam will, in the end, pick up the bills anyway, right?
The other especially piquant quote came from Mr. Rifaat Atif, a Christian pharmacist:
“What have we gotten from the revolution? We don’t trust the army any more. The money has stopped. There’s no security.”
Whether Mr. Atif was referring to Egyptian Christians or Egyptians in general when he used the pronoun “we” is not certain, but it probably doesn’t matter; the sentiment he so articulately expressed applies to both.
Christians and Jews fare especially poorly when Middle Eastern strongmen are rapidly deposed either by angry mobs or by foreign intervention inspired by a diaphanous yet ardent desire to install democracy. This has been especially true in, of late, Egypt and Iraq.
Why do Jews and Christians do so poorly in the wake of the hasty overthrows that the Bush/Obama administration, the U.S. (and, for the most part, the world) media, and at least a hefty plurality of the western public think are such terrific ideas? Because democracy is not such a great idea. Democracy, either quickly in the case of the Third World or slowly in the case of the West, becomes mob rule, a mere means of the majority to rob and/or exploit the minority. In the Middle East, the majority is not favorably disposed toward Christians and Jews and thus, when democracy arises, or is imposed, the majority sees it as an opportunity to go after those the majority doesn’t like. Our Founding Fathers knew that democracy, at least in its pure form, was glorified mob rule, which is why they established on these shores not a democracy but a democratic republic, with proper safeguards (perhaps most importantly, the Bill of Rights) against the onset of mob rule, safeguards which have been fraying over the last hundred years or so, but that is another issue.
While democracy is not such a great system, self-rule, generally in the form of a democratic republic, can be a very good idea, the best form of government, but only if the proper groundwork is in place, including respect for minority rights, property rights, the sanctity of contracts, etc.. Self governance is more than voting or, in the latest bastardizations of which the Bush/Obama Administration and the media are so fond, assembling a mob in the street and tossing out the people in charge with nary a clue as to what their replacement will be. Effective and enduring self governance requires a people that understands the proper limits of government, respects the rights of their neighbors, and embraces the responsibilities that come with self government. But democracy requires only a vote or the ability of a mob to get the authorities to accede to its demands. And yet we are supposed to genuflect at the mere mention of the word “democracy,” as if the repeated and strident utterance of it gives legitimacy to whatever those demanding "democracy" would like.
Reports that clashes between Coptic Christians and Muslims have killed 13 people in Egypt in recent days have confirmed, as if there were any doubt, the prescience, seminality, and perspicacity of my, inter alia, 2/11/11 post on Egypt NEED A LITTLE RAIN ON YOUR PARADE? I’M YOUR MAN!
The Wall Street Journal’s coverage of the Christian/Muslim fighting, along with other travails befalling the democratic paradise the U.S. mainstream media told us to expect in the wake of the swift deposition of Hosni Mubarak, contained two salient quotes. The first was from Mr. Naguib Sawiris, chairman of Orascom Telecom, one of the largest publicly held companies in the Middle East:
“Another 60 days and the economy will go bust.”
But who needs an economy when the hearts of “the people” are in the right place and Uncle Sam will, in the end, pick up the bills anyway, right?
The other especially piquant quote came from Mr. Rifaat Atif, a Christian pharmacist:
“What have we gotten from the revolution? We don’t trust the army any more. The money has stopped. There’s no security.”
Whether Mr. Atif was referring to Egyptian Christians or Egyptians in general when he used the pronoun “we” is not certain, but it probably doesn’t matter; the sentiment he so articulately expressed applies to both.
Christians and Jews fare especially poorly when Middle Eastern strongmen are rapidly deposed either by angry mobs or by foreign intervention inspired by a diaphanous yet ardent desire to install democracy. This has been especially true in, of late, Egypt and Iraq.
Why do Jews and Christians do so poorly in the wake of the hasty overthrows that the Bush/Obama administration, the U.S. (and, for the most part, the world) media, and at least a hefty plurality of the western public think are such terrific ideas? Because democracy is not such a great idea. Democracy, either quickly in the case of the Third World or slowly in the case of the West, becomes mob rule, a mere means of the majority to rob and/or exploit the minority. In the Middle East, the majority is not favorably disposed toward Christians and Jews and thus, when democracy arises, or is imposed, the majority sees it as an opportunity to go after those the majority doesn’t like. Our Founding Fathers knew that democracy, at least in its pure form, was glorified mob rule, which is why they established on these shores not a democracy but a democratic republic, with proper safeguards (perhaps most importantly, the Bill of Rights) against the onset of mob rule, safeguards which have been fraying over the last hundred years or so, but that is another issue.
While democracy is not such a great system, self-rule, generally in the form of a democratic republic, can be a very good idea, the best form of government, but only if the proper groundwork is in place, including respect for minority rights, property rights, the sanctity of contracts, etc.. Self governance is more than voting or, in the latest bastardizations of which the Bush/Obama Administration and the media are so fond, assembling a mob in the street and tossing out the people in charge with nary a clue as to what their replacement will be. Effective and enduring self governance requires a people that understands the proper limits of government, respects the rights of their neighbors, and embraces the responsibilities that come with self government. But democracy requires only a vote or the ability of a mob to get the authorities to accede to its demands. And yet we are supposed to genuflect at the mere mention of the word “democracy,” as if the repeated and strident utterance of it gives legitimacy to whatever those demanding "democracy" would like.
Tuesday, March 8, 2011
YUAN I SHOULD BUY SOME MORE STUFF FROM YOU?
3/8/11
This morning’s (i.e., Tuesday, 3/8’s, page A9) Wall Street Journal reports that China is seeking to reduce its trade surplus but does not plan to do so by allowing the yuan to appreciate. Rather, China plans to lower tariffs across the board but to be especially aggressive in reducing duties on goods imported from developing countries. The National People’s Congress also emphasized that it would like to increase imports from the U.S. in order to rebalance unilateral trade with the world’s largest economy. Whether China will be able to get its people to import more from the United States is questionable; Chinese consumers and, especially, Chinese businesses seem to have a decided preference for German goods. Perhaps the Chinese rulers will have to flex their authoritarian muscles a bit more than usual to achieve this alteration of the people’s mindset, but I digress.
China’s efforts to reduce its trade surplus but its refusal to do by allowing the yuan (or renminbi, depending on, I suppose, what day it is) to appreciate confirms a point I made in my 6/21/10 post LOOK WHO’S PULLING THE RICKSHAW NOW. The Chinese authorities’ extreme reluctance to let the yuan appreciate has little to do with its trade balance and almost everything to do with its enormous stock of dollar denominated assets, $1.16 trillion dollars in U.S. treasuries alone at last count. In other words, China’s steadfast defense of the yuan arises from a concern about its balance sheet rather than its income statement.
This morning’s (i.e., Tuesday, 3/8’s, page A9) Wall Street Journal reports that China is seeking to reduce its trade surplus but does not plan to do so by allowing the yuan to appreciate. Rather, China plans to lower tariffs across the board but to be especially aggressive in reducing duties on goods imported from developing countries. The National People’s Congress also emphasized that it would like to increase imports from the U.S. in order to rebalance unilateral trade with the world’s largest economy. Whether China will be able to get its people to import more from the United States is questionable; Chinese consumers and, especially, Chinese businesses seem to have a decided preference for German goods. Perhaps the Chinese rulers will have to flex their authoritarian muscles a bit more than usual to achieve this alteration of the people’s mindset, but I digress.
China’s efforts to reduce its trade surplus but its refusal to do by allowing the yuan (or renminbi, depending on, I suppose, what day it is) to appreciate confirms a point I made in my 6/21/10 post LOOK WHO’S PULLING THE RICKSHAW NOW. The Chinese authorities’ extreme reluctance to let the yuan appreciate has little to do with its trade balance and almost everything to do with its enormous stock of dollar denominated assets, $1.16 trillion dollars in U.S. treasuries alone at last count. In other words, China’s steadfast defense of the yuan arises from a concern about its balance sheet rather than its income statement.
“LET’S LEND IT, SPEND IT, SEND IT ROLLING ALONG…” PART (AT LEAST) II
3/8/11
This morning’s (i.e., Tuesday, 3/8’s page A5) Wall Street Journal reports the great news that consumer non-mortgage borrowing grew in January at a 2.5% annual rate. Economic and financial cognoscenti are delighted that the consumer is out there digging a hole for himself again, but the economic solons are sullen and down in the mouth at the news that the 2.5% increase was largely attributable to a 7% increase in non-revolving debt, i.e., loans for cars, college, and boats. Revolving debt (i.e., credit card debt) shrank at a 6.4% annual rate. But the economic wunderkinds did find some solace, some glimmers of hope, in the otherwise baleful news that consumers are actually getting themselves out from under credit card debt. Opined IHS Global Insight economist Gregory Daco:
“Strong demand for credit for automobiles is a good sign for consumer spending. We might see a few more drops in revolving credit over the coming months, but there is evidence that we’re at a turning point.”
Oh, boy! Consumers are doing what comes all too naturally for the average American by burying themselves in credit card and other consumer debt. This, of course, is good news because such financial self-immolation will help us emerge from a crisis that arose from too much debt, primarily too much consumer debt. And it is the smart guys, the economic wise men, the best and the brightest who are spewing this counter-intuitive nonsense.
Ever wonder why I am seemingly permanently bearish on the markets, the economy, and the future of the Republic?
This morning’s (i.e., Tuesday, 3/8’s page A5) Wall Street Journal reports the great news that consumer non-mortgage borrowing grew in January at a 2.5% annual rate. Economic and financial cognoscenti are delighted that the consumer is out there digging a hole for himself again, but the economic solons are sullen and down in the mouth at the news that the 2.5% increase was largely attributable to a 7% increase in non-revolving debt, i.e., loans for cars, college, and boats. Revolving debt (i.e., credit card debt) shrank at a 6.4% annual rate. But the economic wunderkinds did find some solace, some glimmers of hope, in the otherwise baleful news that consumers are actually getting themselves out from under credit card debt. Opined IHS Global Insight economist Gregory Daco:
“Strong demand for credit for automobiles is a good sign for consumer spending. We might see a few more drops in revolving credit over the coming months, but there is evidence that we’re at a turning point.”
Oh, boy! Consumers are doing what comes all too naturally for the average American by burying themselves in credit card and other consumer debt. This, of course, is good news because such financial self-immolation will help us emerge from a crisis that arose from too much debt, primarily too much consumer debt. And it is the smart guys, the economic wise men, the best and the brightest who are spewing this counter-intuitive nonsense.
Ever wonder why I am seemingly permanently bearish on the markets, the economy, and the future of the Republic?
Monday, March 7, 2011
MR. MASLOW, CALL YOUR OFFICE
3/7/11
Today’s (i.e., Monday, 3/7’s) Wall Street Journal reports that China’s economic plans for this year through 2015 focus on improving the lot of those at the bottom rungs of the economic ladder by, among other things, “encouraging” employers to raise wages in line with productivity redoubling efforts to maintain price stability, especially for basic commodities that comprise a gargantuan share of the budgets of the poor. The slight shift in emphasis away from growth toward redistribution of the fruits of that growth toward the poor was in place before the onset of the problems the Middle East is currently experiencing. The focus on inflation, however, received an unusual degree of emphasis at the National People’s Congress that started over the weekend.
What the renewed emphasis by the Chinese authorities on the lot of the underclass, and especially the concern about worldwide commodity inflation’s impact on the poor, indicates is that the Chinese leadership understands what starry-eyed types in the West are nowhere near comprehending: The unrest in the Middle East is at best only ancillarily a manifestation of a yearning for “freedom” and “democracy;” it is, primarily, a reaction to the ravaging effect of increasing commodity prices on the already meager livelihoods of these countries’ lower classes. For an insightful discussion of this topic, see my 2/3/11 post AFTER ALL THESE CENTURIES, THE EGYPTIANS STILL HAVE SOMETHING TO TEACH US.
The regimes that have been overthrown or that are currently experiencing dissent, or worse, are indeed oppressive dictatorships, but that has been the case since the Europeans abandoned their colonies in response to demands from the starry-eyed for “freedom” and “democracy.” So what changed to make the people finally rise up after enduring such political deprivation from the likes of Hosni Mubarak and Moammar Gadhafi (or however he is spelling his name today)? Food prices rocketed upwards, strangling the already choking budgets of the poor in these post-colonial paradises.
Freedom and “democracy,” (whatever the latter is; no one seems to understand the concept, certainly no one in the Bush/Obama administration, but I digress) may be nice, but eating is nicer. People who live day to day and hand to mouth cannot be concerned with the things that preoccupy the faculty lounge at Yale or the editorial pages of the Wall Street Journal and the New York Times. People will tolerate authoritarianism, or worse, if their economic lot, balanced finely between survival and at least figurative starvation, consistently falls on the side of survival. But when the generalissimos can no longer deliver economically, then people get upset.
The Chinese understand this; most of the West, or at least most of Western governments and media, don’t. Perhaps that is why the “Jasmine Revolution” has not taken off in China.
Today’s (i.e., Monday, 3/7’s) Wall Street Journal reports that China’s economic plans for this year through 2015 focus on improving the lot of those at the bottom rungs of the economic ladder by, among other things, “encouraging” employers to raise wages in line with productivity redoubling efforts to maintain price stability, especially for basic commodities that comprise a gargantuan share of the budgets of the poor. The slight shift in emphasis away from growth toward redistribution of the fruits of that growth toward the poor was in place before the onset of the problems the Middle East is currently experiencing. The focus on inflation, however, received an unusual degree of emphasis at the National People’s Congress that started over the weekend.
What the renewed emphasis by the Chinese authorities on the lot of the underclass, and especially the concern about worldwide commodity inflation’s impact on the poor, indicates is that the Chinese leadership understands what starry-eyed types in the West are nowhere near comprehending: The unrest in the Middle East is at best only ancillarily a manifestation of a yearning for “freedom” and “democracy;” it is, primarily, a reaction to the ravaging effect of increasing commodity prices on the already meager livelihoods of these countries’ lower classes. For an insightful discussion of this topic, see my 2/3/11 post AFTER ALL THESE CENTURIES, THE EGYPTIANS STILL HAVE SOMETHING TO TEACH US.
The regimes that have been overthrown or that are currently experiencing dissent, or worse, are indeed oppressive dictatorships, but that has been the case since the Europeans abandoned their colonies in response to demands from the starry-eyed for “freedom” and “democracy.” So what changed to make the people finally rise up after enduring such political deprivation from the likes of Hosni Mubarak and Moammar Gadhafi (or however he is spelling his name today)? Food prices rocketed upwards, strangling the already choking budgets of the poor in these post-colonial paradises.
Freedom and “democracy,” (whatever the latter is; no one seems to understand the concept, certainly no one in the Bush/Obama administration, but I digress) may be nice, but eating is nicer. People who live day to day and hand to mouth cannot be concerned with the things that preoccupy the faculty lounge at Yale or the editorial pages of the Wall Street Journal and the New York Times. People will tolerate authoritarianism, or worse, if their economic lot, balanced finely between survival and at least figurative starvation, consistently falls on the side of survival. But when the generalissimos can no longer deliver economically, then people get upset.
The Chinese understand this; most of the West, or at least most of Western governments and media, don’t. Perhaps that is why the “Jasmine Revolution” has not taken off in China.
IRAQ AND AFGHANISTAN ARE NOT ENOUGH FOR THESE GUYS
3/7/11
This morning’s (i.e., Monday, 3/7’s) Wall Street Journal reports that Senators John McCain and Mitch McConnell are (Surprise!) banging the drum for military aid to the insurgents seemingly locked in a civil war against Moammar Gadhafi, or however the western press is spelling this glorified thug’s name today. The Journal’s editorial page (which is growing to include most of the paper, but I digress) is employing an entire percussion section in its calls for greater U.S. action in the Libyan Civil War.
Two questions:
Is there any war, anywhere, that Senators McCain and McConnell, the Wall Street Journal, and the neocon chicken hawks think we should not get involved in?
Do these cheerleaders for war know anything of history, how great nations and empires, from Rome to Great Britain, were brought down by, admittedly among other things, imperial overreach and the foreign entanglements and meddling in other country’s affairs about which the Founding Fathers warned us?
Is there no end to the hubris, and the willingness to shed the blood and treasure of others, of these war enthusiasts?
This morning’s (i.e., Monday, 3/7’s) Wall Street Journal reports that Senators John McCain and Mitch McConnell are (Surprise!) banging the drum for military aid to the insurgents seemingly locked in a civil war against Moammar Gadhafi, or however the western press is spelling this glorified thug’s name today. The Journal’s editorial page (which is growing to include most of the paper, but I digress) is employing an entire percussion section in its calls for greater U.S. action in the Libyan Civil War.
Two questions:
Is there any war, anywhere, that Senators McCain and McConnell, the Wall Street Journal, and the neocon chicken hawks think we should not get involved in?
Do these cheerleaders for war know anything of history, how great nations and empires, from Rome to Great Britain, were brought down by, admittedly among other things, imperial overreach and the foreign entanglements and meddling in other country’s affairs about which the Founding Fathers warned us?
Is there no end to the hubris, and the willingness to shed the blood and treasure of others, of these war enthusiasts?
Thursday, March 3, 2011
POLITICS, STRANGE BEDFELLOWS, AND DEFENDING RAHM
3/3/11
Today’s (i.e., Thursday, 3/3’s) Chicago Tribune, in yet another example of febrile media hyperbole, featured a front page article by David Kidwell, Hal Dardick, and John Chase, proclaiming that
“A secretly funded political group aligned with Rahm Emanuel has donated more than $445,000 to aldermanic candidates to help the mayor-elect in a high-stakes battle over control of City Hall.”
The group to which the article refers is For a Better Chicago. It is "secretly funded" because election law allows the group to protect the identity of its contributors. The extent to which it is “aligned with Rahm Emanuel” is twofold, but certainly limited. First, For a Better Chicago advertises itself as a pro-business group and, as such, believes in many of the policies in which Mr. Emanuel purports to believe, including doing something about the city budget, wasteful spending, and public pensions, not attempting to slam the door on businesses that the union chieftains around town find unacceptable, presumably due to their failure to pay sufficient tribute to the aforementioned labor poohbahs and their henchmen and toadies in the City Council, and generally making the city of Chicago a place in which people want to invest, and not only under government duress. Second, For a Better Chicago is run by Greg Goldner, a long time Chicago political operative who managed Rahm Emanuel’s first congressional campaign in 2002.
The article is interesting not only for the example it provides of the typical hyperventilation that passes for journalism these days, especially when the dark forces can somehow be identified with that ever evil business community; the article is also interesting for highlighting several ironies of the recently, and lamentably, completed mayoral campaign. The first two of these ironies were readily apparent, and quite delicious, even in the throes of the campaign. The third is not, but is still quite astonishing.
First, a guy who has served as chief-of-staff for President Obama, widely, but perhaps not accurately, considered the most liberal president in the last fifty years or so, was the most pro-business candidate in the mayoral race and looks like he is about to become the most pro-business mayor in our fair city’s history. (Well, that title may go to William Hale “Big Bill” Thompson (1915-1923, 1927-1931), but the businesses for which he was most “pro” were associated with guys named Torrio, Capone, and Nitto (Apparently, Frank Nitti’s real name was “Nitto,” but was misspelled in a newspaper story early in his career, and “Nitti” stuck, but I digress within a digression.), but I digress.) Since much (but by no means all) of the measures that are considered pro-business are identified with those of a conservative stripe, we could say that President Obama’s former chief-of-staff was the most conservative candidate in our race for mayor. This indicates that either Chicago has wandered so far to the left side of the political spectrum that it has fallen off the table, that ideology means nothing when compared with personalities and personal advantage, that Mr. Emanuel and Mr. Obama were not nearly in synch ideologically, or that ideology means nothing to Mr. Emanuel, my favorite of the aforementioned theories.
Second, many conservative types (including yours truly), who normally would be expected to approve of Rahm Emanuel’s advertised policy prescriptions for the city of Chicago, opposed Rahm Emanuel, obviously for reasons that transcended policy. This indicates that personalities or associations often trump policy; that is, we’ll often vote against people we agree with because there is something about them, or the people they associate with or work for, that we just don’t like, or we’ll vote for people we don’t agree with because there is something about them, or the people they are identified with, that we like. This is not as crazy as it sounds; ideology, or even policy, is often a disposable, even quaint, consideration for many politicians, while their character, background, and the personal ties they have with us remain more or less permanent.
Third, I, after all I’ve written about Mr. Emanuel during the campaign, am writing a piece seemingly defending our mayor-elect. Wasn’t it Metternich who said that countries have no permanent allies, only permanent interests? Could the same be said about people, at least as concerns their political interests and proclivities?
Today’s (i.e., Thursday, 3/3’s) Chicago Tribune, in yet another example of febrile media hyperbole, featured a front page article by David Kidwell, Hal Dardick, and John Chase, proclaiming that
“A secretly funded political group aligned with Rahm Emanuel has donated more than $445,000 to aldermanic candidates to help the mayor-elect in a high-stakes battle over control of City Hall.”
The group to which the article refers is For a Better Chicago. It is "secretly funded" because election law allows the group to protect the identity of its contributors. The extent to which it is “aligned with Rahm Emanuel” is twofold, but certainly limited. First, For a Better Chicago advertises itself as a pro-business group and, as such, believes in many of the policies in which Mr. Emanuel purports to believe, including doing something about the city budget, wasteful spending, and public pensions, not attempting to slam the door on businesses that the union chieftains around town find unacceptable, presumably due to their failure to pay sufficient tribute to the aforementioned labor poohbahs and their henchmen and toadies in the City Council, and generally making the city of Chicago a place in which people want to invest, and not only under government duress. Second, For a Better Chicago is run by Greg Goldner, a long time Chicago political operative who managed Rahm Emanuel’s first congressional campaign in 2002.
The article is interesting not only for the example it provides of the typical hyperventilation that passes for journalism these days, especially when the dark forces can somehow be identified with that ever evil business community; the article is also interesting for highlighting several ironies of the recently, and lamentably, completed mayoral campaign. The first two of these ironies were readily apparent, and quite delicious, even in the throes of the campaign. The third is not, but is still quite astonishing.
First, a guy who has served as chief-of-staff for President Obama, widely, but perhaps not accurately, considered the most liberal president in the last fifty years or so, was the most pro-business candidate in the mayoral race and looks like he is about to become the most pro-business mayor in our fair city’s history. (Well, that title may go to William Hale “Big Bill” Thompson (1915-1923, 1927-1931), but the businesses for which he was most “pro” were associated with guys named Torrio, Capone, and Nitto (Apparently, Frank Nitti’s real name was “Nitto,” but was misspelled in a newspaper story early in his career, and “Nitti” stuck, but I digress within a digression.), but I digress.) Since much (but by no means all) of the measures that are considered pro-business are identified with those of a conservative stripe, we could say that President Obama’s former chief-of-staff was the most conservative candidate in our race for mayor. This indicates that either Chicago has wandered so far to the left side of the political spectrum that it has fallen off the table, that ideology means nothing when compared with personalities and personal advantage, that Mr. Emanuel and Mr. Obama were not nearly in synch ideologically, or that ideology means nothing to Mr. Emanuel, my favorite of the aforementioned theories.
Second, many conservative types (including yours truly), who normally would be expected to approve of Rahm Emanuel’s advertised policy prescriptions for the city of Chicago, opposed Rahm Emanuel, obviously for reasons that transcended policy. This indicates that personalities or associations often trump policy; that is, we’ll often vote against people we agree with because there is something about them, or the people they associate with or work for, that we just don’t like, or we’ll vote for people we don’t agree with because there is something about them, or the people they are identified with, that we like. This is not as crazy as it sounds; ideology, or even policy, is often a disposable, even quaint, consideration for many politicians, while their character, background, and the personal ties they have with us remain more or less permanent.
Third, I, after all I’ve written about Mr. Emanuel during the campaign, am writing a piece seemingly defending our mayor-elect. Wasn’t it Metternich who said that countries have no permanent allies, only permanent interests? Could the same be said about people, at least as concerns their political interests and proclivities?
“YEAH, HE’S THE ONE…HE’S THE ONE WE OUGHT TO GET!!!”
3/3/11
Today’s (i.e., Thursday, 3/3’s) Wall Street Journal reports on the results of a Wall Street Journal/NBC News Poll that displays the typical schizophrenia, bordering on hypocrisy, that characterizes discussion of reducing the federal deficit through spending reductions and/or tax increases.
In this case, we are not only dealing with the normal flight from reality that surrounds such discussion, i.e., everyone wants to reduce the deficit but no one wants his program cut. While such know-nothingness was clearly on display in this poll (Less than a quarter of Americans think cutting Social Security or Medicare is necessary to “significantly reduce the deficit. Even tea partiers, by a 2 to 1 margin, oppose cutting Social Security.), in this case it is just another manifestation of the normal willingness to gore everyone else’s ox to achieve whatever goal one finds desirable in the abstract.
No, what I found interesting and a touch unique about the results of this poll is another instance of respondents’ apparently not understanding the nature of the question. While, apparently, few want social security reduced, more than half favored increasing the retirement age to 69 by 2075 and 60% favored means testing social security and Medicare. Yes, this is yet another instance of an unyielding willingness to cut the other guy’s program (Few people consider themselves wealthy enough to fail any means test to which they would agree and no one sufficiently sentient to respond to much of anything will be under 69 by 2075.), but such measures will in fact “cut social security” to the point at which 60% of Social Security’s underfunding would be eliminated but, again, do so by going after the always evil “other guy,” who may, in fact, be one’s own grandchildren in this instance, but I digress. So people are unwilling to cut Social Security and Medicare but they are willing to cut Social Security and Medicare. This paradox becomes understandable, and compatible with what has come to be understood as human nature, when we see that the respondents are unwilling to cut their own Social Security and Medicare but they are willing to cut someone else’s Social Security and Medicare.
While the poll results are both intriguing and utterly predictable, what make them worthy of a post are their revelations of the willingness of people to means test Social Security. Am I in favor of means testing Social Security? Maybe. Am I in favor of means testing most government programs? Certainly. But my accession is dependent on the nature of the means test. AS LONG AS THE “MEANS” BEING TESTED ARE WHAT A PERSON MADE DURING HIS OR HER LIFE TIME, I’M ALL FOR IT. IF THE “MEANS” BEING TESTED ARE THE WEALTH SOMEONE HAS ACCUMULATED BY THE AGE S/HE IS ELIGIBLE FOR A GIVEN PROGRAM, I AM DEAD-SET, AMDAMANTLY AGAINST SUCH “MEANS” TESTING, for obvious reasons: Such “means testing” will result in the subsidization of people who made a lot of money during their lives and urinated it all away by people who may or may not have made much money in their lives but who, by living a measured and perhaps frugal lifestyle, have managed to enter retirement with a considerable nest egg. Such an arrangement would be nothing less than a surefire prescription for further exacerbating our savings problem, a giant step toward the inevitable ruination of the Republic, an injustice of historic proportions, and an abomination before God and man.
A means test to which the sober among us would agree (i.e., based on what you made, not on what you had) will never be implemented because the spendthrifts, whose towering majority among the American populace will only grow over the years, will work strenuously to see that the frugal among us are forced to subsidize the lifestyles the “high income broke,” felt compelled to pursue when younger, primarily to give them a point from which to look down their noses on those they are demanding take care of them in their old age. And, aided by the utterly predictable continued and intensified mindless and witless orgies to bacchanal, the Republic will hurtle toward its inevitable doom.
Today’s (i.e., Thursday, 3/3’s) Wall Street Journal reports on the results of a Wall Street Journal/NBC News Poll that displays the typical schizophrenia, bordering on hypocrisy, that characterizes discussion of reducing the federal deficit through spending reductions and/or tax increases.
In this case, we are not only dealing with the normal flight from reality that surrounds such discussion, i.e., everyone wants to reduce the deficit but no one wants his program cut. While such know-nothingness was clearly on display in this poll (Less than a quarter of Americans think cutting Social Security or Medicare is necessary to “significantly reduce the deficit. Even tea partiers, by a 2 to 1 margin, oppose cutting Social Security.), in this case it is just another manifestation of the normal willingness to gore everyone else’s ox to achieve whatever goal one finds desirable in the abstract.
No, what I found interesting and a touch unique about the results of this poll is another instance of respondents’ apparently not understanding the nature of the question. While, apparently, few want social security reduced, more than half favored increasing the retirement age to 69 by 2075 and 60% favored means testing social security and Medicare. Yes, this is yet another instance of an unyielding willingness to cut the other guy’s program (Few people consider themselves wealthy enough to fail any means test to which they would agree and no one sufficiently sentient to respond to much of anything will be under 69 by 2075.), but such measures will in fact “cut social security” to the point at which 60% of Social Security’s underfunding would be eliminated but, again, do so by going after the always evil “other guy,” who may, in fact, be one’s own grandchildren in this instance, but I digress. So people are unwilling to cut Social Security and Medicare but they are willing to cut Social Security and Medicare. This paradox becomes understandable, and compatible with what has come to be understood as human nature, when we see that the respondents are unwilling to cut their own Social Security and Medicare but they are willing to cut someone else’s Social Security and Medicare.
While the poll results are both intriguing and utterly predictable, what make them worthy of a post are their revelations of the willingness of people to means test Social Security. Am I in favor of means testing Social Security? Maybe. Am I in favor of means testing most government programs? Certainly. But my accession is dependent on the nature of the means test. AS LONG AS THE “MEANS” BEING TESTED ARE WHAT A PERSON MADE DURING HIS OR HER LIFE TIME, I’M ALL FOR IT. IF THE “MEANS” BEING TESTED ARE THE WEALTH SOMEONE HAS ACCUMULATED BY THE AGE S/HE IS ELIGIBLE FOR A GIVEN PROGRAM, I AM DEAD-SET, AMDAMANTLY AGAINST SUCH “MEANS” TESTING, for obvious reasons: Such “means testing” will result in the subsidization of people who made a lot of money during their lives and urinated it all away by people who may or may not have made much money in their lives but who, by living a measured and perhaps frugal lifestyle, have managed to enter retirement with a considerable nest egg. Such an arrangement would be nothing less than a surefire prescription for further exacerbating our savings problem, a giant step toward the inevitable ruination of the Republic, an injustice of historic proportions, and an abomination before God and man.
A means test to which the sober among us would agree (i.e., based on what you made, not on what you had) will never be implemented because the spendthrifts, whose towering majority among the American populace will only grow over the years, will work strenuously to see that the frugal among us are forced to subsidize the lifestyles the “high income broke,” felt compelled to pursue when younger, primarily to give them a point from which to look down their noses on those they are demanding take care of them in their old age. And, aided by the utterly predictable continued and intensified mindless and witless orgies to bacchanal, the Republic will hurtle toward its inevitable doom.
Wednesday, March 2, 2011
IT’S EVEN WORSE THAN I THOUGHT
3/2/11
Similarly (See the other post of this day.), readers have asked why I have not commented on the travails of Martin Clean or Jerry Mean or Michael Jean or Charlie Bean or Chuckie Spleen or whatever this particular Hollywood moron’s name is. The guy I’m talking about is the no-talent who stars in some execrable exhibition of excerebrosity called Two Men and a Boy or Three Boys and a Man or Four and a Half Girls or some such nonsense. (No, my time is not so utterly valueless that I have ever seen this slimy and malodorous chunk of digestive system product and, yes, I can pronounce such judgments on its remarkable resemblance to barnyard detritus merely by viewing the snippets of it to which I have been involuntarily subjected while watching football or basketball games; imbecilic double entendres that were the height of hilarity among the cognoscenti of the parking lot we used for a playground at St. Walter circa 1967 have somehow ceased to be crisp, bold, and uproarious as one has left pre-puberty in the foggy distances, or even the relatively fresh remembrances, of the past, but I digress.) Though I might not have his name right, you know the idiot to whom I refer.
No, I am not about to launch into a studied comparison of the debilitating effects of addiction to those of other diseases, an expostulation of the rules for Hollywood lame brains, which seem to differ from those that apply to the rest of us, or a studied analysis on the impact on the media business of Mr. Mean’s (or whatever his name is) absence from the parade of banalities on which he stars. No, all I will say on this particular subject is that it is notable not for any of the above but, rather, for what the American public’s fascination with the self-imposed tribulations of Mr. Spleen says about the state of this country, i.e., that any people that gives more than a half thimble of excretory liquid about such subjects is headed toward certain and hopefully mercifully quick doom.
Similarly (See the other post of this day.), readers have asked why I have not commented on the travails of Martin Clean or Jerry Mean or Michael Jean or Charlie Bean or Chuckie Spleen or whatever this particular Hollywood moron’s name is. The guy I’m talking about is the no-talent who stars in some execrable exhibition of excerebrosity called Two Men and a Boy or Three Boys and a Man or Four and a Half Girls or some such nonsense. (No, my time is not so utterly valueless that I have ever seen this slimy and malodorous chunk of digestive system product and, yes, I can pronounce such judgments on its remarkable resemblance to barnyard detritus merely by viewing the snippets of it to which I have been involuntarily subjected while watching football or basketball games; imbecilic double entendres that were the height of hilarity among the cognoscenti of the parking lot we used for a playground at St. Walter circa 1967 have somehow ceased to be crisp, bold, and uproarious as one has left pre-puberty in the foggy distances, or even the relatively fresh remembrances, of the past, but I digress.) Though I might not have his name right, you know the idiot to whom I refer.
No, I am not about to launch into a studied comparison of the debilitating effects of addiction to those of other diseases, an expostulation of the rules for Hollywood lame brains, which seem to differ from those that apply to the rest of us, or a studied analysis on the impact on the media business of Mr. Mean’s (or whatever his name is) absence from the parade of banalities on which he stars. No, all I will say on this particular subject is that it is notable not for any of the above but, rather, for what the American public’s fascination with the self-imposed tribulations of Mr. Spleen says about the state of this country, i.e., that any people that gives more than a half thimble of excretory liquid about such subjects is headed toward certain and hopefully mercifully quick doom.
PRESCIENT MR. PONTIFICATOR
3/2/11
Several people have asked why I have not yet written anything on the Battle of Madison raging just to our north. There are two reasons for my failure to do so. First, I haven’t come up with anything especially profound to say about the issues arising from that episode that someone has not yet said. Second, I have written in the past, before the Wisconsin Follies and the advent of the Flee Party, about public pension and their consequences for public finances and the future of the Republic. Perhaps the most salient, and certainly the most prescient, of those observations came in my 11/16/07 post. I was going to reproduce only the sections of that immortal post that dealt directly with pension but, on rereading it, I noticed that the entire piece exhibited remarkable foresight, so I decided that my readers should have access to all of it. I have, however, highlighted the section dealing with public pensions, which comprises the last two paragraphs.
Thanks.
“ELIHU, WOULD YOU LOOFAH MY STRETCH MARKS?”
11/16/07
The 11/16/07 edition of The Wall Street Journal featured an article on page C1 arguing that the problems in the credit market have percolated down (one might think up, but that is another matter) into the municipal markets. According the to the article, the municipal bond market is experiencing problems because municipal bond insurers (Ambac, FGIC, etc.) have, in recent years, gotten into the business of insuring mortgage backed securities and CMOs. Bad move, obviously. The result has been the stocks’ of the insurers going into virtual free-fall and the credit ratings’ of the insurers coming into question. The ramifications for insured municipal bonds have been obvious.
This argument is good as far as it goes, but looks like another manifestation of the financial press and the financial “community” missing the bigger picture, as with their now faltering certainty that the problems in the mortgage markets are purely a “sub-prime” problem, the wrong-headedness of which has yet to become fully manifest. Yes, the insurers are having difficulty, and this is affecting the municipal market. But the consequences of the mortgage/real estate/credit market troubles for the municipal bond market are far broader.
Municipalities, of course, derive much of their revenue from property taxes, which have come under pressure as property values have fallen, and will continue to do so. The politicians, of course, will futz with the fuliginous formulae used to determine property taxes in order to keep revenue up as real estate values fall, but they will encounter strong, if not overwhelming, political resistance to doing so, especially in a weakening economy.
An even more direct, but less debilitating, impact of the mortgage/real estate problem on municipals is being, and will continue to be, felt through in real estate transfer taxes. In most municipalities, when one sells a house or other piece of property, one must pay a fee, usually several hundred or thousand dollars, to the municipality in which the property sold or property bought is located. The politicians have long found this an easy source of revenue; when people are in the heat of transactions involving several hundred thousand dollars, they barely notice a fee of perhaps a thousand or so. This fee has grown into a major source of municipal revenue. As the real estate market, er, slows down, revenue from this fee has been dramatically reduced. In Chicago, the drastic reduction in such fees has been cited as a major reason for Mayor Daley’s huge property, and other, tax increase. No matter what the Mayor says, the tax increase had little if anything to do with libraries, but I digress.
The big problem in the muni market is just beginning to be felt and, admittedly, is not part of the market’s immediate difficulties but will be far greater as it comes to fruition. This problem is public sector pensions. Our local government employees get perhaps the most generous pensions, on a percentage basis, of anyone in the country. Just about anyone, for instance, knows a cop, teacher, fireman, or just a local bureaucrat who has retired in his or her early 50s on an astronomical percentage (70%-80%) of his or her salary. One of the less shocking aspects of the Drew Peterson story is that the scrofulous Mr. Peterson is now receiving a pension of $72,000 per year after “retiring” at the age of 53 from the Bolingbrook Police Department. And, for those readers not familiar with the Chicago area, Bolingbrook, while not Mayberry, is not exactly tough duty for a cop. These huge and growing pension obligations are consuming an ever greater share of municipal budgets and thus of residents’ property tax bills. Back in the days when local government workers were somewhat underpaid relative to their private sector colleagues and a large percentage of the taxpayers had defined benefit pension plans, the taxpayers, while never happy about paying taxes, were less hesitant to pay real estate taxes to support rich defined benefit plans for municipal workers. But now that local government workers salaries’ are getting higher, pensions are getting ever richer, and the defined benefit pension plan is going the way of the pterodactyl in the private sector, property taxpayers are getting more and more resistant to paying their growing real estate bills when an ever growing portion of those bills is going to fund pension benefits of which they can only dream. This resistance has the potential to turn into outright rebellion as property tax bills continue to skyrocket, local services deteriorate, or both. While not being the immediate source of problems in the muni bond market, this is going to result in a crisis in municipal budgets in the very near future.
So, yes, the problems with muni bond insurers are having a negative impact on the muni market. But the impact of the credit market debacle on the muni market is far wider and deeper, and far larger problems are looming.
Several people have asked why I have not yet written anything on the Battle of Madison raging just to our north. There are two reasons for my failure to do so. First, I haven’t come up with anything especially profound to say about the issues arising from that episode that someone has not yet said. Second, I have written in the past, before the Wisconsin Follies and the advent of the Flee Party, about public pension and their consequences for public finances and the future of the Republic. Perhaps the most salient, and certainly the most prescient, of those observations came in my 11/16/07 post. I was going to reproduce only the sections of that immortal post that dealt directly with pension but, on rereading it, I noticed that the entire piece exhibited remarkable foresight, so I decided that my readers should have access to all of it. I have, however, highlighted the section dealing with public pensions, which comprises the last two paragraphs.
Thanks.
“ELIHU, WOULD YOU LOOFAH MY STRETCH MARKS?”
11/16/07
The 11/16/07 edition of The Wall Street Journal featured an article on page C1 arguing that the problems in the credit market have percolated down (one might think up, but that is another matter) into the municipal markets. According the to the article, the municipal bond market is experiencing problems because municipal bond insurers (Ambac, FGIC, etc.) have, in recent years, gotten into the business of insuring mortgage backed securities and CMOs. Bad move, obviously. The result has been the stocks’ of the insurers going into virtual free-fall and the credit ratings’ of the insurers coming into question. The ramifications for insured municipal bonds have been obvious.
This argument is good as far as it goes, but looks like another manifestation of the financial press and the financial “community” missing the bigger picture, as with their now faltering certainty that the problems in the mortgage markets are purely a “sub-prime” problem, the wrong-headedness of which has yet to become fully manifest. Yes, the insurers are having difficulty, and this is affecting the municipal market. But the consequences of the mortgage/real estate/credit market troubles for the municipal bond market are far broader.
Municipalities, of course, derive much of their revenue from property taxes, which have come under pressure as property values have fallen, and will continue to do so. The politicians, of course, will futz with the fuliginous formulae used to determine property taxes in order to keep revenue up as real estate values fall, but they will encounter strong, if not overwhelming, political resistance to doing so, especially in a weakening economy.
An even more direct, but less debilitating, impact of the mortgage/real estate problem on municipals is being, and will continue to be, felt through in real estate transfer taxes. In most municipalities, when one sells a house or other piece of property, one must pay a fee, usually several hundred or thousand dollars, to the municipality in which the property sold or property bought is located. The politicians have long found this an easy source of revenue; when people are in the heat of transactions involving several hundred thousand dollars, they barely notice a fee of perhaps a thousand or so. This fee has grown into a major source of municipal revenue. As the real estate market, er, slows down, revenue from this fee has been dramatically reduced. In Chicago, the drastic reduction in such fees has been cited as a major reason for Mayor Daley’s huge property, and other, tax increase. No matter what the Mayor says, the tax increase had little if anything to do with libraries, but I digress.
The big problem in the muni market is just beginning to be felt and, admittedly, is not part of the market’s immediate difficulties but will be far greater as it comes to fruition. This problem is public sector pensions. Our local government employees get perhaps the most generous pensions, on a percentage basis, of anyone in the country. Just about anyone, for instance, knows a cop, teacher, fireman, or just a local bureaucrat who has retired in his or her early 50s on an astronomical percentage (70%-80%) of his or her salary. One of the less shocking aspects of the Drew Peterson story is that the scrofulous Mr. Peterson is now receiving a pension of $72,000 per year after “retiring” at the age of 53 from the Bolingbrook Police Department. And, for those readers not familiar with the Chicago area, Bolingbrook, while not Mayberry, is not exactly tough duty for a cop. These huge and growing pension obligations are consuming an ever greater share of municipal budgets and thus of residents’ property tax bills. Back in the days when local government workers were somewhat underpaid relative to their private sector colleagues and a large percentage of the taxpayers had defined benefit pension plans, the taxpayers, while never happy about paying taxes, were less hesitant to pay real estate taxes to support rich defined benefit plans for municipal workers. But now that local government workers salaries’ are getting higher, pensions are getting ever richer, and the defined benefit pension plan is going the way of the pterodactyl in the private sector, property taxpayers are getting more and more resistant to paying their growing real estate bills when an ever growing portion of those bills is going to fund pension benefits of which they can only dream. This resistance has the potential to turn into outright rebellion as property tax bills continue to skyrocket, local services deteriorate, or both. While not being the immediate source of problems in the muni bond market, this is going to result in a crisis in municipal budgets in the very near future.
So, yes, the problems with muni bond insurers are having a negative impact on the muni market. But the impact of the credit market debacle on the muni market is far wider and deeper, and far larger problems are looming.
Tuesday, March 1, 2011
“HERE THEY COME SPINNING OUT OF THE TURN…”
3/1/11
Whether there’s anything especially profound about the ruminations in this particular post is a matter of speculation, but the topic is one that deserves attention for a number of reasons.
Last Sunday’s Chicago Sun-Times contained a feature article on the decline of horse racing in the Chicago area. Probably the most telling statistics cited were that total wagering in 2010, at $725.7 million, dropped 44% from 1992. Total purses in 2010, at $54.3 million, slid 54% since 2002. Harness racing purses dropped 62% from 1992.
The industry and the sport of horse racing is clearly dying and the reason the article cited, the aging of its clientele, is only the veneer of the problem. As loyal readers know, I am not a gambler, though some of my forays in the financial markets might be considered gambling by some. A good friend of mine is a gambler, and a good one. He goes to Vegas several times a year and spends the preponderance of his time there at the tables. He likes the boats and frequently visits the OTB parlors and occasionally goes to the track. He is a serious and skilled gambler, not a bust-out, degenerate gambler. He explained to me years ago that horse racing is dying because it is a very slow form of gambling. When it was the only legal way to gamble, it did fine. Once other forms of gambling became legal, people who were looking for action went to the casinos; they no longer had the patience that playing the horses requires. The only people left in the stands at the track were people who really liked the sport of horse racing. There aren’t many people who match that description, certainly a far smaller number of people than those who just like to gamble, and most folks who really appreciate the horses are indeed older.
The decline of horse racing is a national phenomenon and a national certainty. However, according to the Sun-Times article, the best horses and horsemen that remain are migrating away from Chicago to the east coast, where tracks are allowed to operate slot machines at the track. Though racing is on its deathbed, these tracks manage to horde whatever action is left by having their slot machines subsidize their horse racing business. The obvious “solution,” then, seems to be to allow Illinois tracks to operate slot machines so that the slots can subsidize the ponies.
A number of related questions arise. Why should we subsidize the horse racing industry? What is so magical about it that it deserves an at least quasi-public subsidy? The answer, of course, is politics; the horsemen have powerful friends in public life everywhere the tracks are found, but perhaps nowhere do they have more friends than in Illinois. But the economic question remains: If you are going to be in the business of subsidizing things with gambling (not a good idea, and not entirely because of the more nefarious aspects of gambling, but that is grist for another mill), why horse racing? Aren’t there more worthy things to subsidize, at least on their surface? Schools, health care, tourism, tax reduction, etc. all come to mind.
The argument made by the industry is that there are jobs involved. So what else is new? There are jobs involved in virtually every endeavor, and certainly in every program that politicians use to channel your money to their friends. Real jobs, however, involve providing a product or a service people want so much that they are willing to pay for it, not providing something that other people are being forced to subsidize.
Whether there’s anything especially profound about the ruminations in this particular post is a matter of speculation, but the topic is one that deserves attention for a number of reasons.
Last Sunday’s Chicago Sun-Times contained a feature article on the decline of horse racing in the Chicago area. Probably the most telling statistics cited were that total wagering in 2010, at $725.7 million, dropped 44% from 1992. Total purses in 2010, at $54.3 million, slid 54% since 2002. Harness racing purses dropped 62% from 1992.
The industry and the sport of horse racing is clearly dying and the reason the article cited, the aging of its clientele, is only the veneer of the problem. As loyal readers know, I am not a gambler, though some of my forays in the financial markets might be considered gambling by some. A good friend of mine is a gambler, and a good one. He goes to Vegas several times a year and spends the preponderance of his time there at the tables. He likes the boats and frequently visits the OTB parlors and occasionally goes to the track. He is a serious and skilled gambler, not a bust-out, degenerate gambler. He explained to me years ago that horse racing is dying because it is a very slow form of gambling. When it was the only legal way to gamble, it did fine. Once other forms of gambling became legal, people who were looking for action went to the casinos; they no longer had the patience that playing the horses requires. The only people left in the stands at the track were people who really liked the sport of horse racing. There aren’t many people who match that description, certainly a far smaller number of people than those who just like to gamble, and most folks who really appreciate the horses are indeed older.
The decline of horse racing is a national phenomenon and a national certainty. However, according to the Sun-Times article, the best horses and horsemen that remain are migrating away from Chicago to the east coast, where tracks are allowed to operate slot machines at the track. Though racing is on its deathbed, these tracks manage to horde whatever action is left by having their slot machines subsidize their horse racing business. The obvious “solution,” then, seems to be to allow Illinois tracks to operate slot machines so that the slots can subsidize the ponies.
A number of related questions arise. Why should we subsidize the horse racing industry? What is so magical about it that it deserves an at least quasi-public subsidy? The answer, of course, is politics; the horsemen have powerful friends in public life everywhere the tracks are found, but perhaps nowhere do they have more friends than in Illinois. But the economic question remains: If you are going to be in the business of subsidizing things with gambling (not a good idea, and not entirely because of the more nefarious aspects of gambling, but that is grist for another mill), why horse racing? Aren’t there more worthy things to subsidize, at least on their surface? Schools, health care, tourism, tax reduction, etc. all come to mind.
The argument made by the industry is that there are jobs involved. So what else is new? There are jobs involved in virtually every endeavor, and certainly in every program that politicians use to channel your money to their friends. Real jobs, however, involve providing a product or a service people want so much that they are willing to pay for it, not providing something that other people are being forced to subsidize.
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