Sunday, March 29, 2009

The Civil Heretic
FOR MORE THAN HALF A CENTURY the eminent physicist Freeman Dyson has quietly resided in Prince­ton, N.J., on the wooded former farmland that is home to his employer, the Institute for Advanced Study, this country’s most rarefied community of scholars. Lately, however, since coming “out of the closet as far as global warming is concerned,” as Dyson sometimes puts it, there has been noise all around him. Chat rooms, Web threads, editors’ letter boxes and Dyson’s own e-mail queue resonate with a thermal current of invective in which Dyson has discovered himself variously described as “a pompous twit,” “a blowhard,” “a cesspool of misinformation,” “an old coot riding into the sunset” and, perhaps inevitably, “a mad scientist.”...

...But in the considered opinion of the neurologist Oliver Sacks, Dyson’s friend and fellow English expatriate, this is far from the case. “His mind is still so open and flexible,” Sacks says. Which makes Dyson something far more formidable than just the latest peevish right-wing climate-change denier....

...Dyson is well aware that “most consider me wrong about global warming.” That educated Americans tend to agree with the conclusion about global warming reached earlier this month at the International Scientific Conference on Climate Change in Copenhagen (“inaction is inexcusable”) only increases Dyson’s resistance. Dyson may be an Obama-loving, Bush-loathing liberal who has spent his life opposing American wars and fighting for the protection of natural resources, but he brooks no ideology and has a withering aversion to scientific consensus...

...IT WAS FOUR YEARS AGO that Dyson began publicly stating his doubts about climate change. Speaking at the Frederick S. Pardee Center for the Study of the Longer-Range Future at Boston University, Dyson announced that “all the fuss about global warming is grossly exaggerated.” Since then he has only heated up his misgivings, declaring in a 2007 interview with that “the fact that the climate is getting warmer doesn’t scare me at all” and writing in an essay for The New York Review of Books, the left-leaning publication that is to gravitas what the Beagle was to Darwin, that climate change has become an “obsession” — the primary article of faith for “a worldwide secular religion” known as environmentalism. Among those he considers true believers, Dyson has been particularly dismissive of Al Gore, whom Dyson calls climate change’s “chief propagandist,” and James Hansen, the head of the NASA Goddard Institute for Space Studies in New York and an adviser to Gore’s film, “An Inconvenient Truth.” Dyson accuses them of relying too heavily on computer-generated climate models that foresee a Grand Guignol of imminent world devastation as icecaps melt, oceans rise and storms and plagues sweep the earth, and he blames the pair’s “lousy science” for “distracting public attention” from “more serious and more immediate dangers to the planet.”...

...Dyson agrees with the prevailing view that there are rapidly rising carbon-dioxide levels in the atmosphere caused by human activity. To the planet, he suggests, the rising carbon may well be a MacGuffin, a striking yet ultimately benign occurrence in what Dyson says is still “a relatively cool period in the earth’s history.” The warming, he says, is not global but local, “making cold places warmer rather than making hot places hotter.” Far from expecting any drastic harmful consequences from these increased temperatures, he says the carbon may well be salubrious — a sign that “the climate is actually improving rather than getting worse,” because carbon acts as an ideal fertilizer promoting forest growth and crop yields. “Most of the evolution of life occurred on a planet substantially warmer than it is now,” he contends, “and substantially richer in carbon dioxide.” Dyson calls ocean acidification, which many scientists say is destroying the saltwater food chain, a genuine but probably exaggerated problem. Sea levels, he says, are rising steadily, but why this is and what dangers it might portend “cannot be predicted until we know much more about its causes.” ...

...Dyson has always been strongly opposed to the idea that there is any such thing as an optimal ecosystem — “life is always changing” — and he abhors the notion that men and women are something apart from nature, that “we must apologize for being human.” Humans, he says, have a duty to restructure nature for their survival.

All this may explain why the same man could write “we live on a shrinking and vulnerable planet which our lack of foresight is rapidly turning into a slum” and yet gently chide the sort of Americans who march against coal in Washington. Dyson has great affection for coal and for one big reason: It is so inexpensive that most of the world can afford it. “There’s a lot of truth to the statement Greens are people who never had to worry about their grocery bills,” he says. (“Many of these people are my friends,” he will also tell you.) To Dyson, “the move of the populations of China and India from poverty to middle-class prosperity should be the great historic achievement of the century. Without coal it cannot happen.” That said, Dyson sees coal as the interim kindling of progress. In “roughly 50 years,” he predicts, solar energy will become cheap and abundant, and “there are many good reasons for preferring it to coal.” ...

...Dyson says it’s only principle that leads him to question global warming: “According to the global-warming people, I say what I say because I’m paid by the oil industry. Of course I’m not, but that’s part of their rhetoric. If you doubt it, you’re a bad person, a tool of the oil or coal industry.” Global warming, he added, “has become a party line.”...

...Climate-change specialists often speak of global warming as a matter of moral conscience. Dyson says he thinks they sound presumptuous. As he warned that day four years ago at Boston University, the history of science is filled with those “who make confident predictions about the future and end up believing their predictions,” and he cites examples of things people anticipated to the point of terrified certainty that never actually occurred, ranging from hellfire, to Hitler’s atomic bomb, to the Y2K millennium bug. “It’s always possible Hansen could turn out to be right,” he says of the climate scientist. “If what he says were obviously wrong, he wouldn’t have achieved what he has. But Hansen has turned his science into ideology. He’s a very persuasive fellow and has the air of knowing everything. He has all the credentials. I have none. I don’t have a Ph.D. He’s published hundreds of papers on climate. I haven’t. By the public standard he’s qualified to talk and I’m not. But I do because I think I’m right. I think I have a broad view of the subject, which Hansen does not. I think it’s true my career doesn’t depend on it, whereas his does. I never claim to be an expert on climate. I think it’s more a matter of judgement than knowledge.”...

Saturday, March 28, 2009

Now Is No Time to Give Up on Markets
...Mr. Becker sees the finger prints of big government all over today's economic woes. When I ask him about the sources of the mania in housing prices, the first culprit he names is the Fed. Low interest rates, he says, were "partly, maybe mainly, due to the Fed's policy of keeping [its] interest rates very low during 2002-2004." A second reason rates were low was the "high savings rates primarily from Asia and also from the rest of the world."

"People debate the relative importance of the two and I don't think we know exactly," Mr. Becker admits. But what is clear is that "when you have low interest rates, any long-lived assets tend to go up in price because they are based upon returns accruing over many years. When interest rates are low you don't discount these returns very much and you get high asset prices."

On top of that, Mr. Becker says, there were government policies aimed at "extending the scope of homeownership in the United States to low-credit, low-income families." This was done through "the Community Reinvestment Act in the '70s and then Fannie Mae and Freddie Mac later on" and it put many unqualified borrowers into the mix.

The third effect, Mr. Becker says, was the "bubble mentality." By this "I mean that much of the additional lending and borrowing was based on expectations that prices would continue to rise at rates we now recognize, and should have recognized then, were unsustainable."

Could this behavior be considered rational? "There is a lot of debate in economics about whether we can understand bubbles within a rational framework. There are models where you can do it, but it's not easy," he says. What he does seem sure about is that "the lending would not have continued unless there was this expectation that prices would continue to rise and therefore one could refinance these assets through the higher prices." That mentality was at least partly related to Fed action, he says, because the low interest rates "generated an increase in prices and I think that helped generate some of this excess of optimism."..

Control Freaks
Geithner said Thursday that President Obama's administration needs to impose "not modest repairs at the margin, but new rules of the game" for America's banks, finance companies, insurers and hedge funds.

The only problem is, the old rules of the game were set by the very people in Congress who will set the new ones. This means the new rules likely won't be much of an improvement — if any.

The irony of this, of course, was pointed out by political scientist Michael Barone, who notes the bank bailout plan unveiled by Geithner earlier this week actually relies heavily on mostly unregulated companies to bail out regulated ones.

Now, Geithner wants control of even those unregulated companies, though they're guilty of nothing other than being successful....

How U.S. Health Care Really Stacks Up
...But what we spend isn't thrown down a rathole. The National Center for Policy Analysis has published a study, "10 Surprising Facts About American Health Care," that shows how Americans get something for the extra dollars they lay out. To wit:

• "Americans have better survival rates than Europeans for common cancers."...

..."Americans are responsible for the vast majority of all health care innovations." The top five U.S. hospitals conduct more clinical trials than all the hospitals in any other single developed nation; the most important recent medical innovations were developed here....

The Geithner Paradox: Unregulated Institutions Bailing Out Regulated Ones
...But I have noticed what I think is a paradox in the Geithner plan. He is asking the most unregulated parts of the financial system—hedge funds, private equity firms—to bail out the most regulated part of the financial system—the banks. With government help, or subsidy, of course. But of course the government isn't really regulated either, is it? Except, I suppose, through the political process.

Democrats like Barack Obama and Barney Frank, at least on the campaign trail or in sound bites, have portrayed the financial crisis as the product of deregulation. The solution, they say, is more regulation. In that vein Frank, one of the brainiest members of Congress, is proposing that the Federal Reserve become a regulator of systemic risk, with the power to regulate firms that because of their size or strategic position are of systemic importance.

My American Enterprise colleague Peter Wallison has argued powerfully that this is a bad idea. Neither the Federal Reserve or other regulators identified the systemic risk which caused this crisis. Neither did most financial institutions or investors. Systemic risk is hard to identify for the very reason that it is systemic: It results from just about everyone doing what turns out to be the wrong thing. (Housing prices will always go up, therefore there is no risk in buying mortgage-backed securities, etc.) Identifying some firms as posing systemic risk is saying that they are too big to fail, in which case they'll take undue risks and end up having to be bailed out by the government. These strike me as very strong arguments.

Which takes me back to the Geithner paradox. He has singled out unregulated institutions as the only ones to bail out regulated institutions....

National Health Preview
...In Massachusetts's latest crisis, Governor Deval Patrick and his Democratic colleagues are starting to move down the path that government health plans always follow when spending collides with reality -- i.e., price controls. As costs continue to rise, the inevitable results are coverage restrictions and waiting periods. It was only a matter of time.

They're trying to manage the huge costs of the subsidized middle-class insurance program that is gradually swallowing the state budget. The program provides low- or no-cost coverage to about 165,000 residents, or three-fifths of the newly insured, and is budgeted at $880 million for 2010, a 7.3% single-year increase that is likely to be optimistic. The state's overall costs on health programs have increased by 42% (!) since 2006.

Like gamblers doubling down on their losses, Democrats have already hiked the fines for people who don't obtain insurance under the "individual mandate," already increased business penalties, taxed insurers and hospitals, raised premiums, and pumped up the state tobacco levy. That's still not enough money.

So earlier this year, Mr. Patrick appointed a state commission to figure out how to control costs and preserve "this grand experiment." One objective is to change the incentives for preventative care and treatments for chronic disease, but everyone says that. It sometimes results in better health but always more spending. So-called "pay for performance" financing models, on the other hand, would do away with fee for service -- but they also tend to reward process, not the better results implied.

What are the alternatives? If health planners won't accept the prices set by the marketplace -- thus putting themselves out of work -- the only other choice is limiting care via politics, much as Canada and most of Europe do today. The Patrick panel is considering one option to "exclude coverage of services of low priority/low value." Another would "limit coverage to services that produce the highest value when considering both clinical effectiveness and cost." (Guess who would determine what is high or low value? Not patients or doctors.) Yet another is "a limitation on the total amount of money available for health care services," i.e., an overall spending cap....

Wednesday, March 25, 2009

The Toxic Assets We Elected
With the braying of 328 yahoos -- members of the House of Representatives who voted for retroactive and punitive use of the tax code to confiscate the legal earnings of a small, unpopular group -- still reverberating, the Obama administration yesterday invited private-sector investors to become business partners with the capricious and increasingly anti-constitutional government. This latest plan to unfreeze the financial system came almost half a year after Congress shoveled $700 billion into the Troubled Assets Relief Program, $325 billion of which has been spent without purchasing any toxic assets.

TARP funds have, however, semi-purchased, among many other things, two automobile companies (and, last week, some of their parts suppliers), which must amaze Sweden. That unlikely tutor of America regarding capitalist common sense has said, through a Cabinet minister, that the ailing Saab automobile company is on its own: "The Swedish state is not prepared to own car factories."

Another embarrassing auditor of American misgovernment is China, whose premier has rightly noted the unsustainable trajectory of America's high-consumption, low-savings economy. He has also decorously but clearly expressed sensible fears that his country's $1 trillion-plus of dollar-denominated assets might be devalued by America choosing, as banana republics have done, to use inflation for partial repudiation of improvidently incurred debts.

From Mexico, America is receiving needed instruction about fundamental rights and the rule of law. A leading Democrat trying to abolish the right of workers to secret ballots in unionization elections is California's Rep. George Miller who, with 15 other Democrats, in 2001 admonished Mexico: "The secret ballot is absolutely necessary in order to ensure that workers are not intimidated into voting for a union they might not otherwise choose." Last year, Mexico's highest court unanimously affirmed for Mexicans the right that Democrats want to strip from Americans. ...

...Jefferson warned that "great innovations should not be forced on slender majorities." But Democrats, who trace their party's pedigree to Jefferson, are contemplating using "reconciliation" -- a legislative maneuver abused by both parties to severely truncate debate and limit the minority's right to resist -- to impose vast and controversial changes on the 17 percent of the economy that is health care. When the Congressional Budget Office announced that the president's budget underestimates by $2.3 trillion the likely deficits over the next decade, his budget director, Peter Orszag, said: All long-range budget forecasts are notoriously unreliable -- so rely on ours. ...

Monday, March 23, 2009

Ex-Bush admin official: Many at Gitmo are innocent
SAN JUAN, Puerto Rico – Many detainees locked up at Guantanamo were innocent men swept up by U.S. forces unable to distinguish enemies from noncombatants, a former Bush administration official said Thursday. "There are still innocent people there," Lawrence B. Wilkerson, a Republican who was chief of staff to then-Secretary of State Colin Powell, told The Associated Press. "Some have been there six or seven years."

Wilkerson, who first made the assertions in an Internet posting on Tuesday, told the AP he learned from briefings and by communicating with military commanders that the U.S. soon realized many Guantanamo detainees were innocent but nevertheless held them in hopes they could provide information for a "mosaic" of intelligence.

"It did not matter if a detainee were innocent. Indeed, because he lived in Afghanistan and was captured on or near the battle area, he must know something of importance," Wilkerson wrote in the blog. He said intelligence analysts hoped to gather "sufficient information about a village, a region, or a group of individuals, that dots could be connected and terrorists or their plots could be identified."

Wilkerson, a retired Army colonel, said vetting on the battlefield during the early stages of U.S. military operations in Afghanistan was incompetent with no meaningful attempt to discriminate "who we were transporting to Cuba for detention and interrogation."...

Friday, March 20, 2009

Supporters of Capitalism Are Crazy, Says Harvard
Last weekend, Harvard University sponsored a conference called (I am not making this up) "The Free Market Mindset: History, Psychology, and Consequences." Its purpose was to try to figure out why, since everyone knows the current crisis amounts to a failure of the market economy, the stupid rubes continue to believe in it....

...This conference, we were told,

brings together leading scholars in law, economics, social psychology, and social cognition to present and discuss their research regarding the historical origins, psychological antecedents, and policy consequences of the free market mindset. Their work illustrates that the magic of the marketplace is partially an illusion based on faulty assumptions and outmoded approaches....

The Cost Of Free Care
Establishing universal government health care might cost as much as $1.5 trillion, according to one new estimate. And what'll we get? As usual, the sorry British system provides another glimpse....

...John Rother, public policy director at the American Association of Retired Persons, a group that would benefit from low-ball estimates, also figures that the program will take $1.5 trillion across a decade.

These, of course, are early estimates. If history is any guide, the real costs will be higher. In fact, the price tag of Obama's plan has already grown. Sheils estimated the scheme Obama pitched while campaigning would cost less than $1.2 trillion.

But don't worry. Everyone will be getting free health care, just as they do in Great Britain, home to a National Health Services hospital in Stafford where thirsty patients drink from flower vases, according to London's Daily Mail, and others are "left in soiled linen on filthy wards."

Stafford, unfortunately, isn't the only British government hospital that's not up to Third World standards. There is documented evi dence of poor care and filthy conditions at other NHS facilities....

In Defense of Distrust in Government
President Barack Obama declared in his inaugural address that "our patchwork heritage is a strength" because people of all backgrounds and creeds had come together to make America great. But there was one group, Obama suggested, that wasn't quite welcome in the American family: the "cynics," those miserable killjoys who dare to "question the scale of [the federal government's] ambitions."...

...But, as usual, the political elites have it precisely backwards. Declining trust in government is a good thing, something that Americans of every political stripe ought to celebrate.

Conservatives should welcome increasing skepticism toward federal power, because that skepticism makes ambitious federal programs much less likely to pass. Vanderbilt University's Marc Hetherington, one of America's leading scholars on the subject, writes that declining faith in the feds makes "another Great Society or New Frontier... unlikely in a post-Cold War world."

Professor Hetherington leans left, so he's not happy that the data has driven him to that conclusion. But even though increased political distrust presents major challenges for the Democratic agenda, liberals should recognize that there's a silver lining in the growing cloud of skepticism.

When Americans trust their government too readily, they tend to support policies that most liberals oppose. The post-9/11 period led to the greatest rise in political trust since Watergate, which helped George W. Bush make the case for what turned out to be a disastrous war in Iraq.

Professor Hetherington's research shows that declining trust decreases support for foreign-policy adventurism, and other scholars have shown that it also makes the public less likely to endorse restrictions on civil liberties....

Britain apologises for 'Third World' hospital
The British government apologised Wednesday after a damning official report into a hospital likened by one patient's relative to "a Third World" health centre.

Stafford Hospital in central England was found to have appalling standards of care, putting patients at risk and leading to some dying, according to a report on Tuesday.

Between 400 and 1,200 more people died than would have been expected in a three-year period at the National Health Service (NHS) hospital, according to an investigation by the Healthcare Commission watchdog.

"We do apologise to all those people who have suffered from the mistakes that have been made in the Stafford Hospital," said Prime Minister Gordon Brown, questioned on the matter at his weekly grilling in the House of Commons.

Receptionists with no medical training were left to to assess patients arriving at the hospital's accident and emergency department, the report found.

Julie Bailey, whose 86-year-old mother Bella died in the hospital in November 2007, said she and other family members slept in a chair at her bedside for eight weeks because they were so concerned about poor care.

"What we saw in those eight weeks will haunt us for the rest of our lives," said the 47-year-old. "We saw patients drinking out of flower vases they were so thirsty.

"There were patients wandering around the hospital and patients fighting. It was continuous through the night. Patients were screaming out in pain because you just could not get pain relief.

"It was like a Third World country hospital. It was an absolute disgrace." ...

BOVARD: Great medical records roundup
Computerization of personal health-care records is one of the showcases of the new stimulus bill. President Obama promised: "We will make the immediate investments necessary to ensure that within five years all of America's medical records are computerized." Congress ponied up $19 billion to subsidize doctors and hospitals computerizing patient record and creating electronic health-care tracking systems.

The ultimate goal of the Obama program is "the utilization of a certified electronic health record for each person in the United States by 2014," as the stimulus bill stated. But having a massive electronic database will make it far easier for the government to coerce both doctors and patients. This is a peril as bad or worse than the Patriot Act. ...

...The feds have an appalling record for protecting the confidentiality of veterans' health care records. The issue is not whether the personal health information government commandeers will be abused. Instead, it is simply a question of when, where and how it will be exploited. ...

The Intolerable Smugness of Bill Moyers
Bill Moyers took it in the shins this week after the Washington Post's Joe Stephens, drawing on FBI files liberated by a FOIA request, reported the liberal lion's role in hunting suspected homosexuals inside the Lyndon Johnson White House.

The Post story's primary focus is on the FBI investigation of presidential aide Jack Valenti's sexual orientation, an investigation OK'd by President Johnson. It also reports that Moyers, then a special assistant to the president, asked the FBI to investigate two additional administration figures thought to have homosexual tendencies.

These weren't the only Moyers White House homo-hunts. On Commentary's blog, Jason Maoz quotes former U.S. Deputy Attorney General Laurence Silberman, who wrote in the Wall Street Journal in 2005 that weeks before the 1964 Johnson-Goldwater election, Moyers "was tasked to direct [FBI Director J. Edgar] Hoover to do an investigation of Goldwater's staff to find similar evidence of homosexual activity. Mr. Moyers' memo to the FBI was in one of the files." ...

Financial Crisis Quotation of the Day matter how bad you think market capitalism is, the federal government has proved it is worse. Congress originally banned these very bonuses, then stripped the ban out of the stimulus bill and is now threatening confiscatory taxes on the lawful recipients. The Treasury knew about the bonuses and vouched for their legality but now wants double the money back somehow. How, exactly, the Treasury expects any straight-thinking financial entity to enter into a voluntary public-private "partnership" to solve the financial crisis given this track record is a mystery to me. ...

Spending Under President George W. Bush
...Republicans often claim to be the party of smaller government. Many Republicans would express support for Ronald Reagan’s observation: “Growth, prosperity and ultimately human fulfillment, are created from the bottom up, not the government down.”2 Unfortunately, once Republicans are elected to political office, they tend to fall into the Washington trap of assuming that more federal spending will solve the nation’s problems. Certainly, President Bush appears to have fallen into this trap. So did the Republicans in Congress.

Harvard economist Jeffrey Frankel argues that we should not be surprised by the discrepancy between the rhetoric and the actual policies of Republicans. Frankel even argues that “the Republicans have become the party of fiscal irresponsibility, trade restriction, big government, and bad microeconomics.”3 Frankel is incorrect about the microeconomics—Republicans generally pursue sounder tax policies than Democrats, for example—but when it comes to big government spending, the Bush Administration seems to have gone out of its way to confirm Frankel’s point.

Saturday, March 14, 2009

Now You Own It, Mr. President
...Well, then, we also must concede that nearly every initiative enacted in the first 50 days by the Obama administration has exacerbated what Bush started.

Isn't it too early to judge? It would be if Obama had not accelerated the timeline with his "ambitious" agenda, including the partisan trillion-dollar project masquerading as a stimulus bill and the deficit-busting budget. It would be if Obama had not worked early to support agenda-driven omnibus pork bills, job-killing cap and trade schemes, and union assaults on workers' rights, to name just a few of his priorities.

Obama can do anything, apparently, except properly staff the Treasury Department. Aren't those guys supposed to be "fixing" the economy or something?

Then again, it also should be noted that if Treasury Secretary Timothy Geithner, whose gibberish-infused explanation of the administration's bank bailout non-plan knocked the Dow Jones down 4 percent in one day, is indicative of "staff," maybe Obama is doing us all a favor.

The Dow Jones industrial average, actually, has reacted to Obama by plunging nearly 20 percent since he became president. That's an obliteration of wealth that no stimulus bill will recoup. Since Election Day, the market has lost nearly 30 percent of its value—trillions of dollars, not from CEO bonuses, as you may have hoped, but from your 401(k) and the private sector.

"The stock market is sort of like a tracking poll in politics. It bobs up and down day to day, and if you spend all your time worrying about that, then you're probably going to get the long-term strategy wrong," Obama recently explained....

What Planetary Emergency?
Assume that man-made global warming exists. So what? That was the premise of a fascinating presentation by Indur Goklany during the second day of sessions at the International Conference on Climate Change. Goklany, who works in the Office of Policy Analysis of the U.S. Department of the Interior and is the author of The Improving State of the World: Why We're Living Longer, Healthier, More Comfortable Lives on a Cleaner Planet, made it clear that he was not speaking on behalf of the federal government....

...From the Stern Review, Goklany took the worst case scenario, where man-made global warming produces market and non-market losses equal to 35 percent of the benefits that are projected to exist in the absence of climate change by 2200. What did he find? Even assuming the worst emissions scenario, incomes for both developed and developing countries still rise spectacularly. In 1990, average incomes in developing countries stood around $1,000 per capita and at aroud $14,000 in developed countries. Assuming the worst means that average incomes in developing countries would rise in 2100 to $62,000 and in developed countries to $99,000. By 2200, average incomes would rise to $86,000 and $139,000 in developing and developed countries, respectively. In other words, the warmest world turns out to be the richest world.

Looking at WHO numbers, one finds that the percentage of deaths attributed to climate change now is 13th on the list of causes of mortality, standing at about 200,000 per year, or 0.3 percent of all deaths. High blood pressure is first on the list, accounting for 7 million (12 percent) of deaths; high cholesterol is second at 4.4 million; and hunger is third. Clearly, climate change is not the most important public health problem today. But what about the future? Again looking at just the worst case of warming, climate change would boost the number of deaths in 2085 by 237,000 above what they would otherwise be according to the fast track analyses. Many of the authors of the fast track analyses also co-authored the IPCC's socioeconomic impact assessments. ...

Deception at Core of Obama Plans
... At the very center of our economic near-depression is a credit bubble, a housing collapse and a systemic failure of the entire banking system. One can come up with a host of causes: Fannie Mae and Freddie Mac pushed by Washington (and greed) into improvident loans, corrupted bond-ratings agencies, insufficient regulation of new and exotic debt instruments, the easy money policy of Alan Greenspan's Fed, irresponsible bankers pushing (and then unloading in packaged loan instruments) highly dubious mortgages, greedy house-flippers, deceitful homebuyers.

The list is long. But the list of causes of the collapse of the financial system does not include the absence of universal health care, let alone of computerized medical records. Nor the absence of an industry-killing cap-and-trade carbon levy. Nor the lack of college graduates. Indeed, one could perversely make the case that, if anything, the proliferation of overeducated, Gucci-wearing, smart-ass MBAs inventing ever more sophisticated and opaque mathematical models and debt instruments helped get us into this credit catastrophe in the first place.

And yet with our financial house on fire, Obama makes clear both in his speech and his budget that the essence of his presidency will be the transformation of health care, education and energy. Four months after winning the election, six weeks after his swearing in, Obama has yet to unveil a plan to deal with the banking crisis.

What's going on? "You never want a serious crisis to go to waste," said Chief of Staff Rahm Emanuel. "This crisis provides the opportunity for us to do things that you could not do before."

Things. Now we know what they are. The markets' recent precipitous decline is a reaction not just to the absence of any plausible bank rescue plan, but also to the suspicion that Obama sees the continuing financial crisis as usefully creating the psychological conditions -- the sense of crisis bordering on fear-itself panic -- for enacting his "Big Bang" agenda to federalize and/or socialize health care, education and energy, the commanding heights of post-industrial society.

Clever politics, but intellectually dishonest to the core. ...

Never waste a good crisis, Clinton says on climate
Secretary of State Hillary Clinton told an audience Friday "never waste a good crisis," and highlighted the opportunity of rebuilding economies in a greener, less energy-intensive way.

Highlighting Europe's unease the day after Russia warned that gas flows via Ukraine might be halted, she also condemned the use of energy as a political lever.

Clinton told young Europeans at the European Parliament that global economic turmoil provided a fresh opening. "Never waste a good crisis ... Don't waste it when it can have a very positive impact on climate change and energy security," she said.

The coming evangelical collapse
We are on the verge – within 10 years – of a major collapse of evangelical Christianity. This breakdown will follow the deterioration of the mainline Protestant world and it will fundamentally alter the religious and cultural environment in the West.

Within two generations, evangelicalism will be a house deserted of half its occupants. (Between 25 and 35 percent of Americans today are Evangelicals.) In the "Protestant" 20th century, Evangelicals flourished. But they will soon be living in a very secular and religiously antagonistic 21st century.

This collapse will herald the arrival of an anti-Christian chapter of the post-Christian West. Intolerance of Christianity will rise to levels many of us have not believed possible in our lifetimes, and public policy will become hostile toward evangelical Christianity, seeing it as the opponent of the common good.

Millions of Evangelicals will quit. Thousands of ministries will end. Christian media will be reduced, if not eliminated. Many Christian schools will go into rapid decline. I'm convinced the grace and mission of God will reach to the ends of the earth. But the end of evangelicalism as we know it is close.

Why is this going to happen?

1. Evangelicals have identified their movement with the culture war and with political conservatism. This will prove to be a very costly mistake. Evangelicals will increasingly be seen as a threat to cultural progress. Public leaders will consider us bad for America, bad for education, bad for children, and bad for society. ...

Gunman: 'If You're Not A Christian You're Going To Die'
BOULDER, Colo. -- A 24-year-old ski lift operator who fatally shot the general manager of the Eldora ski area was determined to kill co-workers who weren't Christian, according to court records obtained Thursday.

The documents, filed Wednesday in Boulder District Court, said witnesses told authorities that Derik Bonestroo walked into a building at work, fired a gun into the ceiling and said: "If you're not Christian, you're going to die."...

Some Banks, Feeling Chained, Want to Return Bailout Money
...Financial institutions that are getting government bailout funds have been told to put off evictions and modify mortgages for distressed homeowners. They must let shareholders vote on executive pay packages. They must slash dividends, cancel employee training and morale-building exercises, and withdraw job offers to foreign citizens.

As public outrage swells over the rapidly growing cost of bailing out financial institutions, the Obama administration and lawmakers are attaching more and more strings to rescue funds.

The conditions are necessary to prevent Wall Street executives from paying lavish bonuses and buying corporate jets, some experts say, but others say the conditions go beyond protecting taxpayers and border on social engineering.

Some bankers say the conditions have become so onerous that they want to return the bailout money. The list includes small banks like the TCF Financial Corporation of Wayzata, Minn., and Iberia Bank of Lafayette, La., as well as giants like Goldman Sachs and Wells Fargo. ...

...One of the biggest concerns of the banks is that the program lets Congress and the administration pile on new conditions at any time.

The demands to modify mortgages or forestall evictions are especially onerous, some bank executives and experts say, because they could prompt some institutions to take steps that could lead to greater losses. ...

...Take Fannie Mae and Freddie Mac, the housing-finance companies that the government now controls. In recent months, they have been told to spend billions of dollars buying bundles of mortgages for which there are no other buyers, and to let homeowners refinance their loans — even if they have no equity....

Has Obama's Popularity Peaked?
There is a growing number of Americans, including some in the dominant moderate/liberal media, who are speculating upon this question: When will Barack Obama’s “Day of Reckoning” arrive? Not this month probably, as the President’s honeymoon, while fraying, is still largely intact, in line with other first-termers (yes, including George W. Bush) who haven’t yet reached the benchmark 100-day mark. Yet while hyper-partisans yuk about the largely inconsequential theater of Rush Limbaugh lapping up attention (and ratings) and RNC chairman Michael Steele’s embarrassing apology to the talk radio celebrity, at some point, sooner rather than later, Obama won’t be able to rely on his supporters and Congressional allies to whip up the troops with increasingly pointless Bush-bashing.

As the recession deepens, with even congenitally optimistic economists unable to predict any semblance of recovery in 2009, Obama will be held accountable by citizens who’ve lost their jobs, seen savings evaporate and the stock market—which Obama unwisely commented about last week, saying that daily DJIA/NASDAQ tallies are similar to gyrating political polls—is in the sewer. As any young businessman will tell you, nothing kills off a bad product (like Obama’s economic recovery plan) faster than a good salesman. The President’s a great cheerleader, and it helps that he’s perceived as a hands-on chief executive, but if the results aren’t there, his rhetoric will ring hollow....

Ignoring the hole in the roof
...In the last few months, our economic and financial problems have worsened dramatically, and the administration has really done nothing to fix the problems. Despite this glaring and fundamental issue, Obama continues his incredibly ambitious and expensive plans with almost no regard for the growing economic mayhem. On a day when the Dow again lost another four percent, Obama announced plans for healthcare reform with a $650 billion price tag. He’s prepared to sign a $3.6 trillion budget which will double our national debt and add more to our deficit than all of his predecessors combined; he is prepared to sign the $410 billion omnibus spenging bill replete with its 8570 earmarks—something Obama promised to eliminate. Meanwhile, Geithner has yet to offer any sort of concrete plans to address the economy. The house is crumbling around him, but the President seems determined to make it bigger anyway.

Barack Obama didn’t cause the problems he now faces, but he’s exacerbated them. What Obama and his administration should have done—and perhaps still can—is set aside other plans and focus almost myopically on the economy. Fix this, and Obama’s political capital will be nearly limitless. But fix it, and fix it now.

Gun control: a useless shot in the dark
The fact that 12 of the dead were pupils and teachers at the Albertville School, at which Kretschmer was a former pupil, added to the horror and the speculation. Murderous rampages like this are thankfully rare. Although that fact will be of little comfort to those who lost loved ones and friends in the melee, this should be the one fact to be remembered when the inevitable question - what might have prevented this devastation? - arises.

Two responses to such a tragedy emerged in the British press and blogosphere. The first, rather knee-jerk response is to ask why the authorities don’t control the estimated 10million guns possessed by Germans? The second looks to psychological risk-profiling in order to spot potential teen killers ahead of time. Yet the Kretschmer shootings demonstrate the pointlessness of both responses.

Germany has some of the most onerous gun controls of any country in the world, some passed in response to previous school shootings. Ironically, the German parliament approved tighter gun-control laws on 22 February this year in a move designed to stop the spread of violent crime. The new legislation bans the carrying of replica firearms and so-called airsoft guns as well as knives with a fixed blade of over 12 centimetres.

Previous legislation, passed in April 2008, raised the legal age to obtain a gun licence from 18 to 21. Additional medical and psychological tests were also implemented for under-25s, and pump-action shotguns with pistol-shaped grips were banned. This legislation received a sympathetic hearing after a former pupil injured 11 students at a school in the western town of Emsdetten before turning the gun on himself in 2006. In 2002, a shooting at Gutenberg high school in the town of Erfurt in central Germany came on the day that the country’s parliament approved a new Bill tightening its already strict gun controls. ...

Sunday, March 08, 2009

Let The Inquisition Start With Frank
Even by the extraordinarily loose standards of Congress, it takes some chutzpah for someone such as Frank to suggest that he'll seek prosecutions for those behind the housing and financial crunch and for what he called "a strongly empowered systemic risk regulator."

For Frank, perhaps more than any single individual in private or public life, is responsible for both the housing market mess and subsequent bank disaster. And no, this isn't partisan hyperbole or historical exaggeration.

But first, a little trip down memory lane.

It was Fannie Mae and Freddie Mac, the two so-called Government Sponsored Enterprises (GSEs), that lay behind the crisis. After regulatory changes made to the Community Reinvestment Act by President Clinton in 1995, Fannie and Freddie went into hyper-drive, channeling literally trillions of dollars into the housing markets, using leverage and implicit taxpayers' guarantees....

...President Bush pushed for what the New York Times then called "the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago."

If it had passed, the housing crisis likely would have never boiled over, at least not the extent it did, taking the economy with it. Instead, led by Frank, Democrats stood as a bloc against any changes.

"Fannie Mae and Freddie Mac are not facing any kind of financial crisis," Frank, then the ranking Democrat on the Financial Services Committee, said. "The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing."

It's hard to say why Frank did all this. It could be his close ties to the Neighborhood Assistance Corp., a powerful housing activist group based in Boston, which controls billions in loans. Or that he received some $40,100 in campaign donations from Fannie and Freddie from 1989 to 2008. Or that he has been romantically linked to a one-time executive at Fannie during the 1990s....

Saturday, March 07, 2009

Comparing Our Way to Rationed Health Care
...This language suggesting that comparative effectiveness research would be used to limit access to treatments under Medicare and Medicaid was later dropped when the Senate passed the bill. Nonetheless, few doubt that clinical effectiveness results can very easily transmogrify into cost-effectiveness arguments. But why not save taxpayers money by having the government refuse to pay for ineffective treatments? Because it won't work that way....

Life prolonging cancer drugs to be banned because they cost too much
Thousands of patients with terminal cancer were dealt a blow last night after a decision was made to deny them life prolonging drugs.

The Government's rationing body said two drugs for advanced breast cancer and a rare form of stomach cancer were too expensive for the NHS.

The National Institute for Health and Clinical Excellence is expected to confirm guidance in the next few weeks that will effectively ban their use. ...

Pepsi and IBM are Now More Creditworthy than the U.S. Government
Agora Financial's Rude Awakening notes that the U.S. Government is now considered less credit-worthy than Pepsi or IBM by the credit default swap market...

Disaster Capitalism Revisited
...If the government had followed a laissez-faire policy for the last six months, and output, employment, housing, and financial markets stood exactly where they stand today, what fraction of people would conclude that "Events decisively prove that laissez-faire is a disaster"? Can you honestly give any answer less than 90 percent?...

...Can you imagine any crisis where voters would expect a substantial reduction in government to be the best response? ...

U.S. Likely to Keep the Reins on Fannie and Freddie
Despite assurances that the takeover of Fannie Mae and Freddie Mac would be temporary, the giant mortgage companies will most likely never fully return to private hands, lawmakers and company executives are beginning to quietly acknowledge....

...In the last six weeks alone, the Obama administration has essentially transformed Fannie Mae and Freddie Mac into arms of the federal government. Regulators have ordered the companies to oversee a vast new mortgage modification program, to buy greater numbers of loans, to refinance millions of at-risk homeowners and to loosen internal policies so they can work with more questionable borrowers.

Lawmakers have given the companies access to as much as $400 billion in taxpayer dollars, a sum more than twice as large as the pledges to Citigroup, Bank of America, JPMorgan Chase, General Motors, Wells Fargo, Goldman Sachs and Morgan Stanley combined. ..

Obama's efforts to block a judicial ruling on Bush's illegal eavesdropping
The Obama DOJ's embrace of Bush's state secrets privilege in the Jeppesen (torture/rendition) case generated substantial outrage, and rightly so. But it's now safe to say that far worse is the Obama DOJ's conduct in the Al-Haramain case -- the only remaining case against the Government with any real chance of resulting in a judicial ruling on the legality of Bush's NSA warrantless eavesdropping program. ...

...Yet now, the Obama administration is doing exactly the same thing. Hence, it is accurately deemed "a blow to the Obama administration" that a court might rule on whether George Bush broke the law when eavesdropping on Americans without warrants. Why is the Obama administration so vested in preventing that from happening, and -- worse still -- in ensuring that Presidents continue to have the power to invoke extremely broad secrecy claims in order to block courts from ruling on allegations that a President has violated the law?

Obama defenders take note: this is not a case where the Obama DOJ claims more time is needed to decide what to do, nor is it even a case where the Obama DOJ merely passively adopted the Bush DOJ's already filed arguments. Here, they have done much, much more than that. Obama lawyers have been running around for weeks attempting one desperate, extreme measure after the next to prevent this case from proceeding -- emergency appeals, requests for stays, and every time they lose, threats of still further appeals, this time to the U.S. Supreme Court. ...

Obama's Radicalism Is Killing the Dow
It's hard not to see the continued sell-off on Wall Street and the growing fear on Main Street as a product, at least in part, of the realization that our new president's policies are designed to radically re-engineer the market-based U.S. economy, not just mitigate the recession and financial crisis.

The illusion that Barack Obama will lead from the economic center has quickly come to an end....

...From the poorly designed stimulus bill and vague new financial rescue plan, to the enormous expansion of government spending, taxes and debt somehow permanently strengthening economic growth, the assumptions underlying the president's economic program seem bereft of rigorous analysis and a careful reading of history.

Unfortunately, our history suggests new government programs, however noble the intent, more often wind up delivering less, more slowly, at far higher cost than projected, with potentially damaging unintended consequences. The most recent case, of course, was the government's meddling in the housing market to bring home ownership to low-income families, which became a prime cause of the current economic and financial disaster.

On the growth effects of a large expansion of government, the European social welfare states present a window on our potential future: standards of living permanently 30% lower than ours. ...

The Climate Change Lobby Has Regrets
Jim Rogers is not happy with the Obama administration. Ever since the White House unveiled its costly climate program, the CEO of Duke Energy has been arguing the proposals amount to nothing more than a tax. Indeed.

Mr. Rogers belongs to the U.S. Climate Action Partnership, about 30 companies that decided they were going to dance with the U.S. government to the tune of global warming legislation. The group demanded a "cap-and-trade" system, figuring they'd craft the rules so as to obtain regulatory certainty, with little upfront cost. At the time, Mr. Rogers explained: "If you don't have a seat at the table, you'll wind up on the menu."...

..."People are learning," says William Kovacs, vice president of environment, technology and regulatory affairs at the U.S. Chamber of Commerce (which has been cautious about embracing a climate plan). "The Obama budget did more to help us consolidate and coalesce the business community than anything we could have done. It's opened eyes to the fact that this is about a social welfare transfer system, not about climate."...

Pathologising dissent? Now that’s Orwellian
The idea that ‘climate change denial’ is a psychological disorder – the product of a spiteful, wilful or simply in-built neural inability to face up to the catastrophe of global warming – is becoming more and more popular amongst green-leaning activists and academics. And nothing better sums up the elitism and authoritarianism of the environmentalist lobby than its psychologisation of dissent. The labelling of any criticism of the politics of global warming, first as ‘denial’, and now as evidence of mass psychological instability, is an attempt to write off all critics and sceptics as deranged, and to lay the ground for inevitable authoritarian solutions to the problem of climate change. Historically, only the most illiberal and misanthropic regimes have treated disagreement and debate as signs of mental ill-health.

This weekend, the University of West England is hosting a major conference on climate change denial. Strikingly, it’s being organised by the university’s Centre for Psycho-Social Studies. It will be a gathering of those from the top of society – ‘psychotherapists, social researchers, climate change activists, eco-psychologists’ – who will analyse those at the bottom of society, as if we were so many flitting, irrational amoeba under an eco-microscope. The organisers say the conference will explore how ‘denial’ is a product of both ‘addiction and consumption’ and is the ‘consequence of living in a perverse culture which encourages collusion, complacency and irresponsibility’ (1). It is a testament to the dumbed-down, debate-phobic nature of the modern academy that a conference is being held not to explore ideas – to interrogate, analyse and fight over them – but to tag them as perverse. ...

It’s not the end of the world as we know it
According to the 100 Months Project, a collection of green groups and charities based in Britain and beyond, in around seven or eight years’ time we will reach the climate’s ‘tipping point’ after which there will be ‘no return’. Unless we severely slash our carbon-use now, and lower our horizons, the world will effectively end. The 100 Months website comes complete with a big red ticking clock counting down the seconds, minutes, hours, days and months to the point of ‘no return’. At the time of writing, there are 93 months, or 2,737 days or 65,688 hours, to save our planet.

It is a powerful illustration of the end-of-world fantasies of many in the green movement and at the top of society. Behind all the PC and seemingly reasonable talk of ‘tipping points’, ‘scientific findings’ and ‘carbon calculating’, this is a modern-day, secular version of the countdown to the End of Days that gripped earlier apocalyptic movements in human history. Yet if we are going to have a serious debate about the environmental issues facing our society, and the political challenges associated with them, then we need to state one simple but currently heretical idea: the end of the world is not nigh and, more to the point, humans are the potential makers of history, not merely its unwitting victims. ...

...However, drawing this kind of social conclusion from apparently empirical facts is not the way that science, or society, works. Just because we can split the atom, that doesn’t mean that we have to drop an atom bomb. Just because ultra-violet light from the sun has been proven to damage DNA, that doesn’t mean we can never venture into the sunlight again. If we conclude that increasing levels of human-produced carbon dioxide are altering the climate, how we choose to respond to this finding is a fundamentally political question; environmental science can tell us precisely nothing about how we ought to do that. ...

The Public Mischief Of Public Unions
...Much of their distress is attributable to the rich labor contracts routinely extended to public employees as an ostensible quid pro quo for their giving up the right to strike. But the collective bargaining negotiations mandated under state law are always an unfair match. The state, county and local government officials don't face the certain wrath of shareholders. Rather, they operate in uncertain political waters that allow them to escape voter wrath by granting public employees highly favorable, but less visible, pension packages that become payable only down the road....

...So what happens in bad times? First, no public employee loses either a job or a dollar in pension benefits. Ordinary citizens lose two ways: jobs are cut--unemployment in California just hit 10%--and taxes are raised. What makes this pill all the more bitter is that unions happily wave the libertarian banner of freedom of contract to lock in the status quo. Public unions point to court cases that require the state to honor its employment contracts just like other agreements. Translation: The downturn is everyone else's problem.

This seductive plea of contractual probity ignores the dubious mechanisms that put these obligations into place. State collective bargaining agreements give unions monopoly power; state legislative maneuvers, often backed by pro-union legislators, sweeten the deals already made. These pension deals are never negotiated at arm's length in competitive markets between parties who are free to go elsewhere. Instead, a monopoly union extracts its compensation packages from government officials, many of whom depend on union support to hold public office. These contracts are the kind of self-dealing arrangements that would never be tolerated between a corporation and its key officials. And the subsequent sweeteners simply take property from the majority of citizens who can neither block the transaction nor withhold their tax dollars....

Thursday, March 05, 2009

It Is Time to Admit the Obvious: The Political Classes Deliberately Are Blocking an Economic Recovery
...I believe that it is time for us to understand a basic truth that is coming out of the new regime: There is not going to be a recovery, and that is just fine with Obama and the political classes that now have a death grip on our lives.

This is a harsh and seemingly conspiratorial statement, and people who know me know that I am extremely skeptical of "conspiracy theories," yet here I am peddling what some very well might call a "conspiracy theory." Do I believe that what Washington is doing is a diabolical plot aimed at fundamentally changing the U.S. economy in a way that economic depression will be a permanent way of life?

In a word, yes. The Obama and Democratic proposals are not simply economic documents. They are fundamentally political in nature and they reflect an understanding that few people have of the Great Depression....

...However, I have to add something that most people leave out of the discussion: the New Deal was an unqualified political success, and it was successful precisely because it blocked the economic recovery. This is counter-intuitive, I realize. I have heard discussion in the halls of my university that the public will lose patience with Obama and the Democrats if they don’t deliver and "political guru" Dick Morris even predicts that further economic failure will result in the Republicans gaining political strength.

Don’t count on it. During the 1930s, the Roosevelt administration never had to worry about losing political power, and it held and added to its political majorities. Roosevelt even won a third term of office although the first eight years of his presidency had barely moved the rate of unemployment below what it had been during the worst days of the Herbert Hoover administration.

This spectacular run of political power did not come in spite of the economic crisis; it came because of it. The crisis never ended, and that provided vast opportunities for the political classes in Washington to add to their power over the lives of individuals....

...A true economic recovery would mean that the government would play a secondary role in our lives at best. That clearly is not good enough for Obama and the Democrats, who are not interested in being politically irrelevant. Just as the Republicans’ "K-Street Project" was about forcing businesses and individuals to pay protection money to the GOP, the Democrats are going to stay in power because anyone who votes against them is not going to be able to find meaningful employment.

A true economic recovery would strengthen businesses and families, but it would do so at the expense of the power of the political classes. Such a state of affairs no longer is acceptable in Washington, and Obama and his friends are going to make sure that we don’t forget that either.

The key to holding power, however, is blocking an economic recovery and having an economy in which double-digit unemployment is the norm. Don’t think that this would trigger a revolt from the American voters. Once the voters have come to believe that their own futures are tied to the whims of the political classes, they will vote their personal security. Furthermore, the administration and Congress will do everything possible to further empower labor unions, and we can look for huge inroads as the government simply will declare that businesses and organizations become unionized – or else. Organized labor is a political creation, and that means that every working individual is going to constantly be scrutinized for political loyalties – if that person wants to keep his or her job....

Wednesday, March 04, 2009

Corporatism: FDR's 'Right Path,' is Alive and Well!
"I believe that President Roosevelt has chosen the right path. We are dealing with the greatest social problem ever known. Millions of unemployed must get their jobs back. This cannot be left to private initiative."

And, sure enough President Barack Obama's overall Budget will generate hundreds of thousands of new jobs in the Government sector, people who will be grateful voters in the next election. Here is the Washington Post's piece on that: I'll bet readers thought the opening quote above was perhaps by our President Barack Obama, an admitted admirer of the New Deal.

Actually, it was Joseph Goebbels, Hitler's propaganda chief, in 1933, speaking admiringly of the New Deal as the way for National Socialism to follow. In the economic realm, Hitler's chief Economic Minister was Hjalmar Horace Greeley Schacht, a Corporatist to the core.

Schacht's reformist parents had spent time in America, and were great admirers of Greeley, the journalist who coined the phrase "Go West, young man!"

Today, Corporatism in its many variants, is in the saddle in virtually every major nation on the planet, not only the US and Europe, but Russia, China and India as well. One can observe how easily these ideas spread, often only associated with Mussolini's Italy or Peron's Argentina, by exploring the American occupation of Japan after WWII. ...