Wednesday, December 30, 2009


The Price for Fannie and Freddie Keeps Going Up
On Christmas Eve, when most Americans' minds were on other things, the Treasury Department announced that it was removing the $400 billion cap from what the administration believes will be necessary to keep Fannie Mae and Freddie Mac solvent. This action confirms that the decade-long congressional failure to more closely regulate these two government-sponsored enterprises (GSEs) will rank for U.S. taxpayers as one of the worst policy disasters in our history.

Fannie and Freddie's congressional sponsors—some of whom are now leading the administration's effort to "reform" the financial system—have a lot to answer for. Rep. Barney Frank (D., Mass.), chairman of the House Financial Services Committee, sponsored legislation adopted in 2008 that established a new regulatory structure for the GSEs. But by then it was far too late. The GSEs had begun buying risky loans in 1993 to meet the "affordable housing" requirements established under congressional direction by the Department of Housing and Urban Development (HUD).

Most of the damage was done from 2005 through 2007, when Fannie and Freddie were binging on risky mortgages. Back then, Mr. Frank was the bartender, denying that there was any cause for concern, and claiming that he wanted to "roll the dice" on subsidized housing support. ...

...New research by Edward Pinto, a former chief credit officer for Fannie Mae and a housing expert, has found that from the time Fannie and Freddie began buying risky loans as early as 1993, they routinely misrepresented the mortgages they were acquiring, reporting them as prime when they had characteristics that made them clearly subprime or Alt-A.

In general, a subprime mortgage refers to the credit of the borrower. A FICO score of less than 660 is the dividing line between prime and subprime, but Fannie and Freddie were reporting these mortgages as prime, according to Mr. Pinto. Fannie has admitted this in a third-quarter 10-Q report in 2008.

An Alt-A mortgage is one in which the quality of the mortgage or the underwriting was deficient; it might lack adequate documentation, have a low or no down payment, or in some other way be more likely than a prime mortgage to default. Fannie and Freddie were also reporting these mortgages as prime, according to Mr. Pinto. ...

...But because of Fannie and Freddie's mislabeling, there were millions more high-risk loans outstanding. That meant default rates as well as the actual losses after foreclosure were going to be outside all prior experience. When these rates began to show up early in 2007, it was apparent something was seriously wrong with assumptions on which AAA ratings had been based.

Losses, it was now certain, would invade the AAA tranches of the mortgage-backed securities outstanding. Investors, having lost confidence in the ratings, fled the MBS market and ultimately the market for all asset-backed securities. They have not yet returned.

By the end of 2007, the MBS market collapsed entirely. Assets once carried at par on financial institutions' balance sheets could not be sold except at distress prices. This raised questions about the stability and even the solvency of most of the world's largest financial institutions. ...

...Why Fannie and Freddie did this is still to be determined. But the leading candidate is certainly HUD's affordable housing regulations, which by 2007 required that 55% of all the loans the agencies acquired had to be made to borrowers at or below the median income, with almost half of these required to be low-income borrowers.

Another likely reason for Fannie and Freddie's mislabeling of mortgages was their desire to retain congressional support by "rolling the dice" while making believe they weren't betting. ...

It's a wonderful life working for the government
It looks like a happy new year for you -- if you're a public employee.

That's the takeaway from a recent Rasmussen poll that shows that 46 percent of government employees say the economy is getting better while just 31 percent say it's getting worse. In contrast, 32 percent of those with private-sector jobs say the economy is getting better, while 49 percent it is getting worse.

Nearly half, 44 percent, of government employees rate their personal finances as good or excellent. Only 33 percent of private-sector employees do.

It sounds like public- and private-sector employees are looking at different Americas. And they are.

Private-sector employment peaked at 115.8 million in December 2007, when the recession officially began. It was down to 108.5 million last November. That's a 6 percent decline.

Public-sector employment peaked at 22.6 million in August 2008. It fell a bit in 2009, then has rebounded back to 22.5 million in November. That's less than a 1 percent decline.

This is not an accident; it is the result of deliberate public policy. About one-third of the $787 billion stimulus package passed in February 2009 was directed at state and local governments, which have been facing declining revenues and are, mostly, required to balance their budgets.

The policy aim, Democrats say, was to maintain public services and aid. The political aim, although Democrats don't say so, was to maintain public-sector jobs -- and the flow of union dues to the public employees unions that represent almost 40 percent of public-sector workers.

Those unions in turn have contributed generously to Democrats. Services Employee International Union head Andy Stern, the most frequent nongovernment visitor to the Obama White House, has boasted that his union steered $60 million to Democrats in the 2008 cycle. The total union contribution to Democrats has been estimated at $400 million.

In effect, some significant portion of the stimulus package can be regarded as taxpayer funding of the Democratic Party. Needless to say, no Republicans need apply....

Tuesday, December 29, 2009


Bloomberg’s Blueprint
...a blueprint for how the Obama Administration can screw gun owners without needing anything from Congress. Chuck Michel is responsible for filing to FOIA request to get this one out and public where it belongs. This was the infamous 40 recommendations that the Washington Post reported on a few months ago. It this document doesn’t convince you that MAIG is a significantly more serious threat than any other gun control organization out there, nothing will. Whoever wrote this knows ATF very well, and understands federal gun laws well enough to know how to effectively make changes using only administrative and regulatory changes, which do not require action from the US Congress....

...Let me go down the list and pick out some of the worst offenders, and this is by no means a comprehensive list. Look at the document yourself to find others:

* Require REAL ID compliant identification for all gun purchasers. Those in non-complying states, which are many, will no longer be permitted to buy firearms.
* Recommends a ban on the importation of all “non-sporting” firearms and ammunition, and specifically calls for banning the FN Five-Seven. Kiss cheap imported rounds of military caliber goodbye. Maybe kiss Glock’s goodbye too. MAIG isn’t all that specific on what would be sporting or non sporting. Also note that MAIG can no longer claim they do not advocate banning guns. They do.
* Calls for keeping records for people who get a NICS default proceed, which means your background check has not “cleared” but you went through the required three day waiting period. These records can be kept for up to 20 years, in the case of someone who’s name matches someone on the “terror watch” list and six months ordinarily. Default proceeds can happen if NICS has incomplete records, or the system is down for a protracted period of time.
* Calls for more enforcement of gun shows using the Richmond model. The techniques used at the Richmond gun shows were bad enough that Congress held hearings about the methods, and demanding ATF put a stop to them. They actually recommend rescinding a number of the changes made to prevent these abuses.
* Recommends ways for the administration to exploit loopholes in Tiahrt to publish information on “problematic” gun dealers (so they can be sued by New York City, no doubt). As we’ve pointed out on this blog before, having a lot of traces doesn’t necessarily mean a dealer is breaking the law.
* Lots of recommendations for new record keeping requirements on the part of FFLs
* Requiring placement of alternate serial numbers of every newly manufactured gun, and requiring serial numbers to be deeper and larger. Also require that a consistent serial numbering scheme be adopted across all manufacturers and importers.
* Asks ATF to promote MAIG’s Responsible Dealer Partnership Program that they foisted on Wal-Mart, much like they do with NSSF’s “Don’t Lie for the Other Guy.” They imply NSSF’s program does not go far enough.
* Asks the CPSC to mandate gun safety lock standards. Gun dealers are required to provide these, but many gun owners are older, or younger, and do not have children. This would be a way to add substantially to the cost of a firearm, if a 30 dollar lock needed to be included with each sale.
* Extend the multiple purchase reporting requirement to long guns, especially ARs, 50 caliber firearms, and Kalashnikov variants. MAIG is not very clear on this, and I think it would be difficult for dealers to keep track of the current state of regulation.
* Specifically calls for the Stinger Pen Gun to be reclassified as an AOW. I had never heard of this before, but I guess it really pisses off someone in the New York Mayor’s office, which is a good enough reason, if any, to go buy one....

Monday, December 28, 2009


Administration Won’t Estimate Total Losses of Fannie and Freddie
...The Obama Treasury just went one better, announcing on Christmas Eve that they were uncapping the amount they believe will have to be invested in Fannie and Freddie. The Bush Treasury first estimated the government-sponsored enterprises’ (GSEs) losses at $100 billion each. The Obama administration, which has been using the GSEs to stabilize the housing market by reducing their underwriting standards, upped the ante to $200 billion each. Now the administration has thrown in the towel completely, and dropped a large lump of coal in each taxpayer’s stocking—it won’t even try to estimate the total losses of Fannie and Freddie....

Redefining human rights
...But she did not limit herself to past principles. She offered an innovation: The Obama administration, she said, would "see human rights in a broad context," in which "oppression of want -- want of food, want of health, want of education, and want of equality in law and in fact" -- would be addressed alongside the oppression of tyranny and torture. "That is why," Ms. Clinton said, "the cornerstones of our 21st-century human rights agenda" would be "supporting democracy" and "fostering development."

This is indeed an important change in U.S. human rights policy -- but the idea behind it is pure 20th century. Ms. Clinton's lumping of economic and social "rights" with political and personal freedom was a standard doctrine of the Soviet Bloc, which used to argue at every East-West conference that human rights in Czechoslovakia were superior to those in the United States, because one provided government health care that the other lacked. In fact, as U.S. diplomats used to tirelessly respond, rights of liberty -- for free expression and religion, for example -- are unique in that they are both natural and universal; they will exist so long as governments do not suppress them. Health care, shelter and education are desirable social services, but they depend on resources that governments may or may not possess. These are fundamentally different goods, and one cannot substitute for another.

Ms. Clinton said that in adding "human development" to human rights and democracy, "we have to tackle all three simultaneously." But there are two dangers in her approach. One is that non-democratic regimes will seize on the economic aspect of her policy as an substitute for political reform -- as dictators have been doing for decades....

After the Bailouts, Washington's the Boss
...Today the U.S. government, directly or indirectly, underwrites nine of every 10 new residential mortgages, nearly twice the percentage before the crisis. Just last week, the Treasury said it would cover an unlimited amount of losses at mortgage giants Fannie Mae and Freddie Mac through 2012....

...But the strengthening of the big banks may be distorting the market. Although smaller banks have long had a higher cost of funds than big ones, the gap has widened. The gap averaged 0.03 percentage point for the first seven years of the decade, but it jumped to a 0.66-point disadvantage for smaller banks in the four quarters ended Sept. 30, estimates Dean Baker of the Center for Economic and Policy Research, a liberal think tank. That suggests investors think the government would bail out big banks, but not small ones, if crisis erupted anew, he says....

...The International Monetary Fund estimates U.S. government debt will swell to the equivalent of 108% of annual economic output in 2014, from 62% in 2007, absent politically difficult steps such as raising taxes or cutting benefit programs. As federal debt climbs, an ever-greater fraction of the budget goes just to pay interest, much of it to overseas creditors. The bill will worsen if interest rates rise from their current low levels.

Interest on the debt cost $182 billion in the fiscal year ended Sept. 30. Robert Pozen, chairman of MBS Investment Management, worries that within a decade, the interest bill could rival the defense budget, which was $637 billion last year.

The interventions also carry political costs. Their chief architects -- Fed Chairman Ben Bernanke, Treasury Secretary Timothy Geithner and former Treasury chief Henry Paulson -- say saving Wall Street was essential to saving Main Street. Many Americans, and a vocal group of lawmakers, disagree.

Only 21% of Americans polled by The Wall Street Journal and NBC News in December said they trusted the government to "do what is right," versus 64% shortly after the attacks of Sept. 11, 2001. In Congress, there is growing support for having the Government Accountability Office review the Fed's monetary policy, a move the Fed says would crimp its independence....

Our Selfless Leaders
...Often those in government claim that their tax-increase proposals are simply targeting the affluent like themselves — proof of their own selflessness. President Obama, for example, has complained that the well-off like himself could afford to pay more.

But unlike politicians in Washington, most upscale Americans in private enterprise do not receive free government perks and lavish pensions. Nor are they guaranteed lucrative post-political lobbying and speaking careers....

Sunday, December 27, 2009


Tax Audits Are No Laughing Matter
Barack Obama owes his presidency in no small part to the power of rhetoric. It's too bad he doesn't appreciate the damage that loose talk can do to America's tax system, even as exploding federal deficits make revenues more important than ever.

At his Arizona State University commencement speech last Wednesday, Mr. Obama noted that ASU had refused to grant him an honorary degree, citing his lack of experience, and the controversy this had caused. He then demonstrated ASU's point by remarking, "I really thought this was much ado about nothing, but I do think we all learned an important lesson. I learned never again to pick another team over the Sun Devils in my NCAA brackets. . . . President [Michael] Crowe and the Board of Regents will soon learn all about being audited by the IRS."

Just a joke about the power of the presidency. Made by Jay Leno it might have been funny. But as told by Mr. Obama, the actual president of the United States, it's hard to see the humor. Surely he's aware that other presidents, most notably Richard Nixon, have abused the power of the Internal Revenue Service to harass their political opponents. But that abuse generated a powerful backlash and with good reason. Should the IRS come to be seen as just a bunch of enforcers for whoever is in political power, the result would be an enormous loss of legitimacy for the tax system.

Our income-tax system is based on voluntary compliance and honest reporting by citizens. It couldn't possibly function if most people decided to cheat. Sure, the system is backed up by the dreaded IRS audit. But the threat is, while not exactly hollow, limited: The IRS can't audit more than a tiny fraction of taxpayers. If Americans started acting like Italians, who famously see tax evasion as a national pastime, the system would collapse.

One reason why Americans don't act like Italians is that they see the income-tax system as basically fair in execution. A tax audit or a tax-fraud prosecution is still seen, usually, as evidence that someone has done something wrong. If it comes instead to be seen as "just politics" then the moral component of the system will be gone. For the system to work, people have to believe that it is fundamentally fair....

...The notion that people who are audited are probably just "enemies of the regime," coupled with the idea that big shots get a pass -- that, as Leona Helmsley is reputed to have said, "taxes are for the little people" -- is a recipe for widespread tax evasion. That's how things work in Italy, and in many other countries around the world. But do we want things to work that way here?

Mr. Obama has been accused of not appreciating the importance of financial capital to the proper functioning of the economy. But ill-chosen remarks like his ASU audit threat suggest that he also doesn't appreciate the role of moral capital. That, too, is essential to the proper functioning of a modern economy. As he looks for ways to pay for the spending campaign he's already embarked upon, he'd be well-advised to avoid comments that undercut the very tax system he'll be depending on.

Saturday, December 26, 2009


Rahm Emanuel's profitable stint at mortgage giant
Before its portfolio of bad loans helped trigger the current housing crisis, mortgage giant Freddie Mac was the focus of a major accounting scandal that led to a management shake-up, huge fines and scalding condemnation of passive directors by a top federal regulator.

One of those allegedly asleep-at-the-switch board members was Chicago's Rahm Emanuel—now chief of staff to President Barack Obama—who made at least $320,000 for a 14-month stint at Freddie Mac that required little effort.

As gatekeeper to Obama, Emanuel now plays a critical role in addressing the nation's mortgage woes and fulfilling the administration's pledge to impose responsibility on the financial world.

Emanuel's Freddie Mac involvement has been a prominent point on his political résumé, and his healthy payday from the firm has been no secret either. What is less known, however, is how little he apparently did for his money and how he benefited from the kind of cozy ties between Washington and Wall Street that have fueled the nation's current economic mess.

Though just 49, Emanuel is a veteran Democratic strategist and fundraiser who served three terms in the U.S. House after helping elect Mayor Richard Daley and former President Bill Clinton. The Freddie Mac money was a small piece of the $16 million he made in a three-year interlude as an investment banker a decade ago.

In business as in politics, Emanuel has cultivated an aggressive, take-charge reputation that made him rich and propelled his rise to the front of the national stage. But buried deep in corporate and government documents on the Freddie Mac scandal is a little-known and very different story involving Emanuel.

He was named to the Freddie Mac board in February 2000 by Clinton, whom Emanuel had served as White House political director and vocal defender during the Whitewater and Monica Lewinsky scandals.

The board met no more than six times a year. Unlike most fellow directors, Emanuel was not assigned to any of the board's working committees, according to company proxy statements. Immediately upon joining the board, Emanuel and other new directors qualified for $380,000 in stock and options plus a $20,000 annual fee, records indicate.

On Emanuel's watch, the board was told by executives of a plan to use accounting tricks to mislead shareholders about outsize profits the government-chartered firm was then reaping from risky investments. The goal was to push earnings onto the books in future years, ensuring that Freddie Mac would appear profitable on paper for years to come and helping maximize annual bonuses for company brass.

The accounting scandal wasn't the only one that brewed during Emanuel's tenure.

During his brief time on the board, the company hatched a plan to enhance its political muscle. That scheme, also reviewed by the board, led to a record $3.8 million fine from the Federal Election Commission for illegally using corporate resources to host fundraisers for politicians. Emanuel was the beneficiary of one of those parties after he left the board and ran in 2002 for a seat in Congress from the North Side of Chicago....

Odd Couple Of Norquist, Hamsher Call For Investigation, Rahm's Resignation
Grover Norquist and Jane Hamsher are not often on the same side of anything, beyond both usually being in the Western Hemisphere. Norquist is a leading voice of fiscal conservatism as head of the anti-tax group Americans for Tax Reform; Hamsher is a leading voice of the digital left, whose blog Firedoglake has taken on influence in speaking up for progressives during the health care debate and in pressuring lawmakers through its activist arm, FDL Action.

But the two have united to level serious allegations at White House Chief of Staff Rahm Emanuel and demand his resignation.

Hamsher and Norquist coauthored a letter to Attorney General Eric Holder today calling for a Department of Justice investigation of Emanuel for his role on the board of Freddie Mac, alleging that the White House, since Emanuel arrived there, has blocked an investigation of the government-sponsored mortgage lender.

Emanuel served on Freddie Mac's board in 2000-2001, when he quit to run (successfully) for Congress. He has also recently sparked the ire of liberals like Hamsher after it was reported that he pushed for Senate Democratic leaders to compromise with Sen. Joe Lieberman (I-CT) on health care reform and jettison an expansion of Medicare from the Senate bill....

Mortgage Executive Kills Himself, After Obama Makes Freddie Mac Waste Money on Bailouts
The chief financial officer of mortgage giant Freddie Mac committed suicide today today in his basement in Fairfax County. The Obama Administration forced Freddie Mac to run up billions of dollars in losses to bail out mortgage borrowers, including irresponsible high-income households whose payments are getting reduced to a ridiculously low level.

Until last year, Freddie Mac was a GSE — a Government Sponsored Enterprise, an entity chartered and subsidized by the federal government, but owned by private shareholders. But the federal government seized direct control of Freddie Mac last year after it ran up big losses.

Ironically, although the government took over Freddie Mac in the name of reducing its risky mortgage practices, it ended up doing just the opposite. The government made Freddie run up even bigger losses buying risky loans in an effort to artificially stimulate lending. In conduct reminiscent of Enron, federal regulators tried to prevent Freddie from disclosing to the public and the SEC how Obama’s mortgage bailout was forcing it to lose even more money....


Freddie Mac's Duel With Regulator: Does It Report Government's Role in Its Losses?
...But when Freddie Mac's executives concluded a few weeks ago that they had to disclose that the government's management of the McLean company was undermining its profitability and would cost it tens of billions of dollars, the firm's regulator urged it not to do so, according to several sources familiar with the matter.

Freddie Mac executives refused to bend. The clash grew so severe that they threatened to go to the Securities and Exchange Commission, which oversees corporate disclosures, to secure a ruling that the regulator's request was out of line. The company's regulator backed down, the sources said. ...

...As Freddie Mac executives were preparing their annual 10-K financial disclosure this month, they reported that carrying out the Obama administration's housing plan would cost $30 billion this year. That sum would have to be covered by the Treasury Department. The federal government has pledged to cover $200 billion each in losses for Freddie Mac and Fannie Mae, of which the pair have asked for about $60 billion.

The housing agency asked that the cost of the program be withheld and that the firm soften language describing how government management was undercutting profitability, according to sources.

People familiar with the dispute offered different views about why the regulator sought to prevent the disclosures. One source said the regulatory officials didn't want to make it seem like government actions were causing big losses at the company and would require more taxpayer dollars. Another person said the officials thought that accounting rules would soon change, making the disclosure unnecessary. ...

...The main way that the government is c ausing Freddie to incur losses is by requiring it to play a central role in the Obama administration's Homeowner Affordable and Stability Plan, a $75 billion effort launched this month. The program aims to restructure mortgages that struggling borrowers cannot afford, bolster the sagging housing market and bring down interest rates on home loans. ...


Feds Make Freddie Mac Even Worse, Ripping Off Taxpayers
After federal regulators took over failing mortgage giant Freddie Mac, they didn’t stop its risky lending practices. Instead, they ramped up its risk-taking, making it run up even bigger debts at taxpayer expense to try to artificially pump up the economy. They made Freddie buy countless risky mortgage loans. Recently, the Obama Administration forced it to incur $30 billion in losses as part of the administration’s bailout for irresponsible mortgage borrowers, which caps mortgage payments for even high-income borrowers at a ridiculously low level. The Obama Administration tried to prevent Freddie Mac from even disclosing these losses in the financial disclosures it must make to investors under the securities laws....


U.S. promises unlimited financial assistance to Fannie Mae, Freddie Mac
The Obama administration pledged Thursday to provide unlimited financial assistance to mortgage giants Fannie Mae and Freddie Mac, an eleventh-hour move that allows the government to exceed the current $400 billion cap on emergency aid without seeking permission from a bailout-weary Congress.

The Christmas Eve announcement by the Treasury Department means that it can continue to run the companies, which were seized last year, as arms of the government for the rest of President Obama's current term.

But even as the administration was making this open-ended financial commitment, Fannie Mae and Freddie Mac disclosed that they had received approval from their federal regulator to pay $42 million in Wall Street-style compensation packages to 12 top executives for 2009.

The compensation packages, including up to $6 million each to Fannie Mae and Freddie Mac's chief executives, come amid an ongoing public debate about lavish payments to executives at banks and other financial firms that have received taxpayer aid....

Friday, December 25, 2009


Big paydays for Fannie and Freddie bosses
NEW YORK (CNNMoney.com) -- Top executives at mortgage finance giants Fannie Mae and Freddie Mac, both of which have been under government control since last year, received millions of dollars in pay in 2009, according to documents filed by the companies Thursday.

The chief executive officers of each company got annual pay packages worth $6 million apiece, while other top execs pulled in at least $2 million.

Fannie Mae (FNM, Fortune 500) CEO Michael Williams, who was promoted to CEO on April 21, will receive about $4.2 million in base salary and deferred cash payments for his time in the top job. The filing does not detail how much he was paid for his time as chief operating officer before his promotion, or what he will earn in 2010.

David Johnson, the chief financial officer and No. 2 at the company, was paid at a $3.5 million annual rate. The annual pay rate of five other top Fannie executives topped $2 million apiece.

In addition, Williams and three other top executives are eligible to receive payments pursuant to a 2008 retention program, according to the filing....

Thursday, December 24, 2009


50 years of cooling predicted
... Cosmic rays and chlorofluorocarbons (CFCs), both already implicated in depleting the Earth’s ozone layer, are also responsible for changes in the global climate, a University of Waterloo scientist reports in a new peer-reviewed paper.

In his paper, Qing-Bin Lu, a professor of physics and astronomy, shows how CFCs - compounds once widely used as refrigerants - and cosmic rays - energy particles originating in outer space - are mostly to blame for climate change, rather than carbon dioxide (CO2) emissions. His paper, derived from observations of satellite, ground-based and balloon measurements as well as an innovative use of an established mechanism, was published online in the prestigious journal Physics Reports.

”My findings do not agree with the climate models that conventionally thought that greenhouse gases, mainly CO2, are the major culprits for the global warming seen in the late 20th century,” Lu said. “Instead, the observed data show that CFCs conspiring with cosmic rays most likely caused both the Antarctic ozone hole and global warming....”

In his research, Lu discovers that while there was global warming from 1950 to 2000, there has been global cooling since 2002. The cooling trend will continue for the next 50 years, according to his new research observations....

Good Science, Bad Politics
...We—society and climate researchers—need to discuss now what constitutes "good science." Some think good science is a societal institution that produces results that serve an ideology. Take, for instance, the counsel that then-Danish Prime Minister Anders Fogh Rasmussen gave to scientists at a climate change conference in March, as transcribed by Environmental Research Letters: "I would give you the piece of advice, not to provide us with too many moving targets, because it is already a very, very complicated process. And I need your assistance to push this process in the right direction, and in that respect, I need fixed targets and certain figures, and not too many considerations on uncertainty and risk and things like that."

I do not share that view. For me, good science means generating knowledge through a superior method, the scientific method. The merits of a scientifically constructed result do not depend on its utility for any politician's agenda. Indeed, the utility of my results is not my business, and the contextualization of my results should not depend on my personal preferences. It is up to democratic societies to decide how to use or not use my insights and explanations. ...

...I am told that I should keep my mouth shut, that criticizing colleagues is not "tactful," and will damage the reputation of science—even when the CRU e-mails have already sunk that ship. I hear that the now-notorious "trick" is normal, that to "hide the decline" is just an unfortunate colloquialism. But we know by now that the activity described by these words was by no means innocent....

Wednesday, December 23, 2009


Effects of the Patient Protection and Affordable Care Act on the Federal Budget and the Balance in the Hospital Insurance Trust Fund
...The key point is that the savings to the HI trust fund under the PPACA would be received by the government only once, so they cannot be set aside to pay for future Medicare spending and, at the same time, pay for current spending on other parts of the legislation or on other programs. Trust fund accounting shows the magnitude of the savings within the trust fund, and those savings indeed improve the solvency of that fund; however, that accounting ignores the burden that would be faced by the rest of the government later in redeeming the bonds held by the trust fund. Unified budget accounting shows that the majority of the HI trust fund savings would be used to pay for other spending under the PPACA and would not enhance the ability of the government to redeem the bonds credited to the trust fund to pay for future Medicare benefits. To describe the full amount of HI trust fund savings as both improving the government’s ability to pay future Medicare benefits and financing new spending outside of Medicare would essentially double-count a large share of those savings and thus overstate the improvement in the government’s fiscal position.

If You Like Your Health Plan, You Will NOT Be Able to Keep It
I like my employer’s health plan. Today I learned that under both the Senate and the House bills, I won’t be able to keep my plan. Both bills require reductions in health reimbursement benefits under my plan.

Both the Senate and the House health bills slash a significant part of my employer’s health plan — the Health Flexible Spending Account — restricting them to $2500 and restricting what they can used for.

That single change in my health plan (and my wife’s) will cause our family to pay a couple thousand dollars more each year in income taxes, and yet my FSA might still cause my employer’s plan to trigger the 40% Senate tax on Cadillac plans (I don’t know enough about the full cost of our plans to know)....

Tuesday, December 22, 2009


Reid Bill Says Future Congresses Cannot Repeal Parts of Reid Bill
Senator Jim DeMint (R-S.C.) pointed out some rather astounding language in the Senate health care bill during floor remarks tonight. First, he noted that there are a number of changes to Senate rules in the bill--and it's supposed to take a 2/3 vote to change the rules. And then he pointed out that the Reid bill declares on page 1020 that the Independent Medicare Advisory Board cannot be repealed by future Congresses:

there's one provision that i found particularly troubling and it's under section c, titled "limitations on changes to this subsection."

and i quote -- "it shall not be in order in the senate or the house of representatives to consider any bill, resolution, amendment, or conference report that would repeal or otherwise change this subsection."

this is not legislation. it's not law. this is a rule change. it's a pretty big deal. we will be passing a new law and at the same time creating a senate rule that makes it out of order to amend or even repeal the law.

i'm not even sure that it's constitutional, but if it is, it most certainly is a senate rule. i don't see why the majority party wouldn't put this in every bill. if you like your law, you most certainly would want it to have force for future senates.

i mean, we want to bind future congresses. this goes to the fundamental purpose of senate rules: to prevent a tyrannical majority from trampling the rights of the minority or of future co congresses....

Dred Scott Redux: Obama and the Supremes Stand Up for Slavery
While we were all out doing our Christmas shopping, the highest court in the land quietly put the kibosh on a few more of the remaining shards of human liberty.

It happened earlier this week, in a discreet ruling that attracted almost no notice and took little time. In fact, our most august defenders of the Constitution did not have to exert themselves in the slightest to eviscerate not merely 220 years of Constitutional jurisprudence but also centuries of agonizing effort to lift civilization a few inches out of the blood-soaked mire that is our common human legacy. They just had to write a single sentence.

Here's how the bad deal went down. After hearing passionate arguments from the Obama Administration, the Supreme Court acquiesced to the president's fervent request and, in a one-line ruling, let stand a lower court decision that declared torture an ordinary, expected consequence of military detention, while introducing a shocking new precedent for all future courts to follow: anyone who is arbitrarily declared a "suspected enemy combatant" by the president or his designated minions is no longer a "person." They will simply cease to exist as a legal entity. They will have no inherent rights, no human rights, no legal standing whatsoever -- save whatever modicum of process the government arbitrarily deigns to grant them from time to time, with its ever-shifting tribunals and show trials....

...The Constitution is clear: no person can be held without due process; no person can be subjected to cruel and unusual punishment. And the U.S. law on torture of any kind is crystal clear: it is forbidden, categorically, even in time of "national emergency." And the instigation of torture is, under U.S. law, a capital crime. No person can be tortured, at any time, for any reason, and there are no immunities whatsoever for torture offered anywhere in the law.

And yet this is what Barack Obama -- who, we are told incessantly, is a super-brilliant Constitutional lawyer -- has been arguing in case after case since becoming president: Torturers are immune from prosecution; those who ordered torture are immune from prosecution. They can't even been sued for, in the specific case under review, subjecting uncharged, indefinitely detained captives to "beatings, sleep deprivation, forced nakedness, extreme hot and cold temperatures, death threats, interrogations at gunpoint, and threatened with unmuzzled dogs."

Again, let's be absolutely clear: Barack Obama has taken the freely chosen, public, formal stand -- in court -- that there is nothing wrong with any of these activities. Nothing to answer for, nothing meriting punishment or even civil penalties. What's more, in championing the lower court ruling, Barack Obama is now on record as believing -- insisting -- that torture is an ordinary, "foreseeable consequence" of military detention of all those who are arbitrarily declared "suspected enemy combatants."

And still further: Barack Obama has now declared, openly, of his own free will, that he does not consider these captives to be "persons." They are, literally, sub-humans. And what makes them sub-humans? The fact that someone in the U.S. government has declared them to be "suspected enemy combatants." (And note: even the mere suspicion of being an "enemy combatant" can strip you of your personhood.)

This is what President Barack Obama believes -- believes so strongly that he has put the full weight of the government behind a relentless series of court actions to preserve, protect and defend these arbitrary powers....

...One co-counsel on the case, Shayana Kadidal of the Center for Constitutional Rights, zeroed in on the noxious quintessence of the position taken by the Court, and by our first African-American president: its chilling resemblance to the notorious Dred Scott ruling of 1857, which upheld the principle of slavery....

...Barack Obama has had the audacity to declare himself the heir and embodiment of the lifework of Martin Luther King. Can this declaration of a whole new principle of universal slavery really be what King was dreaming of? Is this the vision he saw on the other side of the mountain? Or is not the nightmarish inversion of the ideal of a better, more just, more humane world that so many have died for, in so many places, down through the centuries?

Desert Vistas vs. Solar Power
AMBOY, Calif. — Senator Dianne Feinstein introduced legislation in Congress on Monday to protect a million acres of the Mojave Desert in California by scuttling some 13 big solar plants and wind farms planned for the region.

But before the bill to create two new Mojave national monuments has even had its first hearing, the California Democrat has largely achieved her aim. Regardless of the legislation’s fate, her opposition means that few if any power plants are likely to be built in the monument area, a complication in California’s effort to achieve its aggressive goals for renewable energy.

Developers of the projects have already postponed several proposals or abandoned them entirely. The California agency charged with planning a renewable energy transmission grid has rerouted proposed power lines to avoid the monument....

The Financial Villain of the Decade
...Though much of the media spotlight has focused on Madoff, and on exorbitantly paid Wall Street bankers and CEOs, it is clear in our poll that readers feel politicians share the blame for the financial crisis.

In all, 25% of readers believe Frank is the most egregious financial scoundrel of the decade. Readers criticized Frank, who serves as chairman of the House Financial Services Committee, for supporting the easing of mortgage standards, and for failing to reform government-created Fannie Mae and Freddie Mac. Those companies owned or guaranteed more than half of the U.S. mortgage market by 2008, and were hobbled by the subprime mortgage crisis. Frank was not immediately available for comment.

“I was torn between Barney Frank, emblematic of the politicians responsible for the R/E bubble, and Alan Greenspan, who could have deflated the bubble early on, thus eliminating the problem while it was relatively ‘cheap’ to do so,” wrote reader LCannon1946.

Former Fed Chairman Alan Greenspan nabbed 17% of the vote. Five percent of the votes went to former Enron CEO Lay. Treasury Secretary Timothy Geithner and former Treasury Secretary Henry Paulson tied with 4% of the vote. Former Countrywide Financial CEO Angelo Mozilo grabbed 3%, as did Fed Chairman Ben Bernanke. A mere 1% voted for Bernard Ebbers. “Paulson and Bernanke are to blame for this economy collapse,” wrote Wantana2. “They started the TARP funds, using the scare tactic that put President Bush in a panic state.”

Though he didn’t make it into the poll, Sen. Christopher Dodd (D., Conn.), who serves as Senate Banking Committee chairman, also got a nod from readers. “Dodd + Frank = VILLAINS,” posted Spalusa. And even President Barack Obama couldn’t escape a few nominations. According to reader Frogigger, the Obama administration has wasted “more money than one man and a D-10 Cat could bury in a hole in 10 years time.”

Monday, December 21, 2009


A Climatology Conspiracy?
The CRU e-mails have revealed how the normal conventions of the peer review process appear to have been compromised by a team* of global warming scientists, with the willing cooperation of the editor of the International Journal of Climatology (IJC), Glenn McGregor. The team spent nearly a year preparing and publishing a paper that attempted to rebut a previously published paper in IJC by Douglass, Christy, Pearson, and Singer (DCPS). The DCPS paper, reviewed and accepted in the traditional manner, had shown that the IPCC models that predicted significant "global warming" in fact largely disagreed with the observational data.

We will let the reader judge whether this team effort, revealed in dozens of e-mails and taking nearly a year, involves inappropriate behavior, including (a) unusual cooperation between authors and editor, (b) misstatement of known facts, (c) character assassination, (d) avoidance of traditional scientific give-and-take, (e) using confidential information, (f) misrepresentation (or misunderstanding) of the scientific question posed by DCPS, (g) withholding data, and more.

*The team is a group of climate scientists who frequently collaborate and publish papers which often support the hypothesis of human-caused global warming. For this essay, the leading team members include Ben Santer, Phil Jones, Timothy Osborn, and Tom Wigley, with lesser roles for several others....

...On 21 July 2008, Santer hears that his paper is formally accepted and expresses his sincere gratitude to Osborn for "all your help with the tricky job of brokering the submission of the paper to IJoC." Osborn responds that "I'm not sure that I did all that much."

On 10 Oct 2008, the Santer et al. paper is published online. Thirty-six days later Santer et al. appears in print, immediately following DCPS, who have waited now over eleven months for their paper to appear in print. The strategy of delaying DCPS and not allowing DCPS to have a simultaneous response to Santer et al. has been achieved.

There'll be nowhere to run from the new world government
...Some of this was sheer hokum: when uttered by Gordon Brown, the word "global", as in "global economic crisis", meant: "It's not my fault". To the extent that the word had intelligible meaning, it also had political ramifications that were scarcely examined by those who bandied it about with such ponderous self-importance. The mere utterance of it was assumed to sweep away any consideration of what was once assumed to be the most basic principle of modern democracy: that elected national governments are responsible to their own people – that the right to govern derives from the consent of the electorate.

The dangerous idea that the democratic accountability of national governments should simply be dispensed with in favour of "global agreements" reached after closed negotiations between world leaders never, so far as I recall, entered into the arena of public discussion. Except in the United States, where it became a very contentious talking point, the US still holding firmly to the 18th-century idea that power should lie with the will of the people.

Nor was much consideration given to the logical conclusion of all this grandiose talk of global consensus as unquestionably desirable: if there was no popular choice about approving supranational "legally binding agreements", what would happen to dissenters who did not accept their premises (on climate change, for example) when there was no possibility of fleeing to another country in protest? Was this to be regarded as the emergence of world government? And would it have powers of policing and enforcement that would supersede the authority of elected national governments? In effect, this was the infamous "democratic deficit" of the European Union elevated on to a planetary scale. And if the EU model is anything to go by, then the agencies of global authority will involve vast tracts of power being handed to unelected officials. Forget the relatively petty irritations of Euro‑bureaucracy: welcome to the era of Earth-bureaucracy, when there will be literally nowhere to run....

...The nation-state has never quite recovered from the bad name it acquired in the last century as the progenitor of world war. But if it is to be relegated to the dustbin of history then we had better come up with new mechanisms for allowing people to have a say in how they are governed. Maybe that could be next year's global challenge.

Millionaires Go Missing
...Maryland couldn't balance its budget last year, so the state tried to close the shortfall by fleecing the wealthy. Politicians in Annapolis created a millionaire tax bracket, raising the top marginal income-tax rate to 6.25%. And because cities such as Baltimore and Bethesda also impose income taxes, the state-local tax rate can go as high as 9.45%. Governor Martin O'Malley, a dedicated class warrior, declared that these richest 0.3% of filers were "willing and able to pay their fair share." The Baltimore Sun predicted the rich would "grin and bear it."

One year later, nobody's grinning. One-third of the millionaires have disappeared from Maryland tax rolls. In 2008 roughly 3,000 million-dollar income tax returns were filed by the end of April. This year there were 2,000, which the state comptroller's office concedes is a "substantial decline." On those missing returns, the government collects 6.25% of nothing. Instead of the state coffers gaining the extra $106 million the politicians predicted, millionaires paid $100 million less in taxes than they did last year -- even at higher rates.

No doubt the majority of that loss in millionaire filings results from the recession. However, this is one reason that depending on the rich to finance government is so ill-advised: Progressive tax rates create mountains of cash during good times that vanish during recessions....

Change Nobody Believes In
...The rushed, secretive way that a bill this destructive and unpopular is being forced on the country shows that "reform" has devolved into the raw exercise of political power for the single purpose of permanently expanding the American entitlement state. An increasing roll of leaders in health care and business are looking on aghast at a bill that is so large and convoluted that no one can truly understand it, as Finance Chairman Max Baucus admitted on the floor last week. The only goal is to ram it into law while the political window is still open, and clean up the mess later....

...Other deceptions include a new entitlement for long-term care that starts collecting premiums tomorrow but doesn't start paying benefits until late in the decade. But the worst is not accounting for a formula that automatically slashes Medicare payments to doctors by 21.5% next year and deeper after that. Everyone knows the payment cuts won't happen but they remain in the bill to make the cost look lower. The American Medical Association's priority was eliminating this "sustainable growth rate" but all they got in return for their year of ObamaCare cheerleading was a two-month patch snuck into the defense bill that passed over the weekend.

The truth is that no one really knows how much ObamaCare will cost because its assumptions on paper are so unrealistic. To hide the cost increases created by other parts of the bill and transfer them onto the federal balance sheet, the Senate sets up government-run "exchanges" that will subsidize insurance for those earning up to 400% of the poverty level, or $96,000 for a family of four in 2016. Supposedly they would only be offered to those whose employers don't provide insurance or work for small businesses....

...Never in our memory has so unpopular a bill been on the verge of passing Congress, never has social and economic legislation of this magnitude been forced through on a purely partisan vote, and never has a party exhibited more sheer political willfulness that is reckless even for Washington or had more warning about the consequences of its actions.

These 60 Democrats are creating a future of epic increases in spending, taxes and command-and-control regulation, in which bureaucracy trumps innovation and transfer payments are more important than private investment and individual decisions. In short, the Obama Democrats have chosen change nobody believes in—outside of themselves—and when it passes America will be paying for it for decades to come.

Trial lawyers buy Democrats in Congress
...Since Jan. 3, 2009, 581 contributions worth $1,261,023 have been made by donors identifying themselves as employees of the 15 firms (contributions by employees who did not identify their employer are not reflected in this data). Democratic candidates and committees received $1,241,978, or 98 percent of the total. The most generous of these lucrative sources of Democratic campaign cash was the Dallas-based Baron & Budd, best known for the late Fred Baron, who was finance chairman for former Sen. John Edwards' 2008 presidential run. Thus far in 2009, Baron & Budd employees have contributed $212,958 to 21 Democrats, and not a cent to Republicans. Second on the list is the New York-based Grant Eisenhofer firm, with employees contributing $184,078 to seven Democrats and no Republicans. Of the 138 total recipients from employees of all 15 of the firms, 122 were Democrats and just 16 were Republicans. The Democrats received contributions averaging more than $4,700, while the GOPers averaged $646.

Has the investment paid off? Besides preventing the inclusion of medical malpractice reform, the Democratic majority in Congress has included multiple trial lawyer earmarks in the House version of Obamacare. Section 257 authorizes state attorneys general to sue companies that violate any federal health care provision and to delegate the work of such suits to class-action plaintiffs' firms. Another trial lawyer earmark in the bill pays states not to enact caps on attorneys' fees or lawsuit settlements.

Besides provisions of Obamacare, class-action trial lawyers are getting their money's worth in other ways. The Ledbetter bill signed by President Obama overturned a Supreme Court ruling upholding deadlines for plaintiffs to file class-action lawsuits, thus clearing the way for class-action suits to be filed years after alleged damages supposedly occur.

Among the pending bills that favor the trial attorneys is one to allow "guilt-by-association" class-action suits against firms doing business with a defendant company. These examples only skim the surface of what Democrats have been doing for their trial lawyer friends this year, but it's enough to make clear the trial bar knows where to invest its settlement fees....

Sunday, December 20, 2009


Harder to buy US Treasuries
IT is getting harder for governments to buy United States Treasuries because the US's shrinking current-account gap is reducing supply of dollars overseas, a Chinese central bank official said yesterday.

The comments by Zhu Min, deputy governor of the People's Bank of China, referred to the overall situation globally, not specifically to China, the biggest foreign holder of US government bonds.

Chinese officials generally are very careful about commenting on the dollar and Treasuries, given that so much of its US$2.3 trillion reserves are tied to their value, and markets always watch any such comments closely for signs of any shift in how it manages its assets.

China's State Administration of Foreign Exchange reaffirmed this month that the dollar stands secure as the anchor of the currency reserves it manages, even as the country seeks to diversify its investments....

Who Needs Data?
...Below is a very brief summary of the conclusions from the climate scientists themselves -- those who believe in man-caused, catastrophic global warming.

* The globe warmed about 0.6o and the oceans rose about six inches in the last hundred years, according to the U.N. IPCC. (I use Celsius throughout unless otherwise noted.)
* We are now in what is called an interglacial period, or the time between ice ages. Previous interglacial peaks were three degrees warmer than now. In Antarctica, these previous peaks were actually six degrees warmer.
* Since the last ice age, the oceans rose about four hundred feet. Most of that occurred before the pyramids were built (and well before modern use of fossil fuels), but the trend for hundreds of years up to the present has been rising sea levels.
* The sea ice of the south polar ice cap has grown in the last thirty years.
* Climate scientists have fairly recently recognized a climate cycle they now call the Atlantic Multidecadal Oscillation. "The cause of the oscillation is not well understood, but the cycle appears to come round about every 60 to 70 years." They think this is why temperatures over the last eight years or so do not show the continued warming their models predicted. This and other cycles (Pacific Decadal Oscillation, El Niño, La Niña) are not included in the IPCC climate models.
* The sun does appear to account for "at least 10 to 30 percent of global warming measured during the past two decades," according to two Duke University physicists. While they were quick to remind us "that their findings do not argue against the basic theory that significant global warming is occurring because of carbon dioxide and other 'greenhouse' gases," they note that IPCC-type climate models do not include any solar influences.
* The "ice caps" on Mars shrank over all three years of initial observation by NASA's Mars Global Surveyor and Odyssey missions, 2005-2007.
* Glaciers in the northern hemisphere generally have been shrinking for about seven hundred years, while those in the southern hemisphere have been shrinking for the last sixty-five hundred years. (You might notice that those times precede the modern use of fossil fuels.)
* Himalayan glaciers, 230 of the largest mid-latitude glaciers in the world, have been growing since at least 1980....

...The IPCC's worst-case scenario over the next hundred years is a temperature rise of 4o (7.2o F) and a sea-level rise of 26 to 59 centimeters (10 to 23 inches). Why would that wipe us out?

Climategate: James Randi forced to recant by Warmist thugs for showing wrong kind of scepticism
You all know James Randi. He’s the world famous Psychic Investigator whose rigorous scepticism has been the undoing of many a fraudulent spoonbender, dodgy faith-healer and ouija-board-wobbling spiritualist.

Randi is the expert magician and escape artist who is offering $1 million in his Paranormal Challenge “to anyone who can show, under proper observing conditions, evidence of any paranormal, supernatural, or occult power or event.” No one has yet come close to claiming it because that’s the kind of fellow Randi is: an utterly fearless seeker-after-truth; the kind of guy who, if you cut him in half – the result of a stage trick going wrong maybe – you’d find the word “Sceptic” right through his middle. Except, of course, being as he’s American it would be spelt Skeptic.

Sadly, it seems that there’s one form of scepticism that not even the great James Randi can be permitted. And that is scepticism towards the existence of Al Gore’s mythical creation ManBearPig, aka Anthropogenic Global Warming.

Randi discovered this to his cost when he tried posting on the subject at his James Randi Educational Foundation website. And it’s not as though he was outing himself as a full-on “denier”. All Randi was trying to do was express a note of caution about the notion of “consensus” within the world of science....

...Just the kind of rational, questioning, thoughtful approach we’ve come to expect from James Randi.

But the eco-fascists among his readership weren’t having it one bit. Here are some of the comments which swiftly appeared below his heretical post:...

Saturday, December 19, 2009


Medicare’s Refusal of Medical Claims Continues to Outpace Private Rate
...The following week, Health Care for America Now, a group supporting the Democrats’ health care reform bill, ran a television ad claiming that private health insurance companies: “Deny 1 out of 5 treatments prescribed by doctors.”

When fact-checked by PolitiFact.com, it turned out the statistic had been derived by the California Nurses Association, which broadened its definition of “denial” to include such administrative non-events as a claim having been sent to the wrong insurer. Such snafus occur behind the scenes, and the patient never knows about them because his/her claim is, in fact, subsequently paid by the correct insurer....

...According to the American Medical Association’s National Health Insurer Report Card for 2008, the government’s health plan, Medicare, denied medical claims at nearly double the average for private insurers: Medicare denied 6.85% of claims. The highest private insurance denier was Aetna @ 6.8%, followed by Anthem Blue Cross @ 3.44, with an average denial rate of medical claims by private insurers of 3.88%

In its 2009 National Health Insurer Report Card, the AMA reports that Medicare denied only 4% of claims—a big improvement, but outpaced better still by the private insurers. The prior year’s high private denier, Aetna, reduced denials to 1.81%—an astounding 75% improvement—with similar declines by all other private insurers, to average only 2.79%....

Federal judge rules concealed carry is probable cause of criminal activity
Northern District of Georgia federal judge Thomas W. Thrash Jr. ruled today that carrying a firearm on MARTA justifies forcible detention by the police, in a federal civil rights lawsuit filed over the half hour long detention and disarmament of GeorgiaCarry.Org member Christopher Raissi....

...In the ruling today, Judge Thrash held that merely carrying a concealed firearm justifies such detention and disarmament. He wrote in his opinion that "possession of a firearms license is an affirmative defense to, not an element of, the crimes of boarding [MARTA] with a concealed weapon and carrying a concealed weapon." ...

HOW MANY DID COMMUNIST REGIMES MURDER?
...With this understood, the Soviet Union appears the greatest megamurderer of all, apparently killing near 61,000,000 people. Stalin himself is responsible for almost 43,000,000 of these. Most of the deaths, perhaps around 39,000,000 are due to lethal forced labor in gulag and transit thereto. Communist China up to 1987, but mainly from 1949 through the cultural revolution, which alone may have seen over 1,000,000 murdered, is the second worst megamurderer. Then there are the lesser megamurderers, such as North Korea and Tito's Yugoslavia.

Obviously the population that is available to kill will make a big difference in the total democide, and thus the annual percentage rate of democide is revealing. By far, the most deadly of all communist countries and, indeed, in this century by far, has been Cambodia under the Khmer Rouge. Pol Pot and his crew likely killed some 2,000,000 Cambodians from April 1975 through December 1978 out of a population of around 7,000,000. This is an annual rate of over 8 percent of the population murdered, or odds of an average Cambodian surviving Pol Pot's rule of slightly over just over 2 to 1.

In sum the communist probably have murdered something like 110,000,000, or near two-thirds of all those killed by all governments, quasi-governments, and guerrillas from 1900 to 1987. Of course, the world total itself it shocking. It is several times the 38,000,000 battle-dead that have been killed in all this century's international and domestic wars. Yet the probable number of murders by the Soviet Union alone--one communist country-- well surpasses this cost of war. And those murders of communist China almost equal it. ...

...Constructing this utopia was seen as though a war on poverty, exploitation, imperialism, and inequality. And for the greater good, as in a real war, people are killed. And thus this war for the communist utopia had its necessary enemy casualties, the clergy, bourgeoisie, capitalists, wreckers, counterrevolutionaries, rightists, tyrants, rich, landlords, and noncombatants that unfortunately got caught in the battle. In a war millions may die, but the cause may be well justified, as in the defeat of Hitler and an utterly racist Nazism. And to many communists, the cause of a communist utopia was such as to justify all the deaths. The irony of this is that communism in practice, even after decades of total control, did not improve the lot of the average person, but usually made their living conditions worse than before the revolution. It is not by chance that the greatest famines have occurred within the Soviet Union (about 5,000,000 dead during 1921-23 and 7,000,000 from 1932-3) and communist China (about 27,000,000 dead from 1959-61). In total almost 55,000,000 people died in various communist famines and associated diseases, a little over 10,000,000 of them from democidal famine. This is as though the total population of Turkey, Iran, or Thailand had been completely wiped out. And that something like 35,000,000 people fled communist countries as refugees, as though the countries of Argentina or Columbia had been totally emptied of all their people, was an unparalleled vote against the utopian pretensions of Marxism-Leninism.

But communists could not be wrong. After all, their knowledge was scientific, based on historical materialism, an understanding of the dialectical process in nature and human society, and a materialist (and thus realistic) view of nature. Marx has shown empirically where society has been and why, and he and his interpreters proved that it was destined for a communist end. No one could prevent this, but only stand in the way and delay it at the cost of more human misery. Those who disagreed with this world view and even with some of the proper interpretations of Marx and Lenin were, without a scintilla of doubt, wrong. After all, did not Marx or Lenin or Stalin or Mao say that. . . . In other words, communism was like a fanatical religion. It had its revealed text and chief interpreters. It had its priests and their ritualistic prose with all the answers. It had a heaven, and the proper behavior to reach it. It had its appeal to faith. And it had its crusade against nonbelievers. ...

...But communism does not stand alone in such mass murder. We do have the example of Nazi Germany, which may have itself murdered some 20,000,000 Jews, Poles, Ukrainians, Russians, Yugoslaves, Frenchmen, and other nationalities. Then there is the Nationalist government of China under Chiang Kai-shek, which murdered near 10,000,000 Chinese from 1928 to 1949, and the Japanese militarists who murdered almost 6,000,000 Chinese, Indonesians, Indochinese, Koreans, Filipinos, and others during world War II. And then we have the 1,000,000 or more Bengalis and Hindus killed in East Pakistan (now Bangladesh) in 1971 by the Pakistan military. Nor should we forget the mass expulsion of ethnic Germans and German citizens from Eastern Europe at the end of World War II, particularly by the Polish government as it seized the German Eastern Territories, killing perhaps over 1,000,000 of them. Nor should we ignore the 1,000,000 plus deaths in Mexico from 1900 to 1920, many of these poor Indians and peasants being killed by forced labor on barbaric haciendas. And one could go on and on to detail various kinds of noncommunist democide.

But what connects them all is this. As a government's power is more unrestrained, as its power reaches into all the corners of culture and society, and as it is less democratic, then the more likely it is to kill its own citizens. There is more than a correlation here. As totalitarian power increases, democide multiplies until it curves sharply upward when totalitarianism is near absolute. As a governing elite has the power to do whatever it wants, whether to satisfy its most personal desires, to pursue what it believes is right and true, it may do so whatever the cost in lives. In this case power is the necessary condition for mass murder. Once an elite have it, other causes and conditions can operated to bring about the immediate genocide, terrorism, massacres, or whatever killing an elite feels is warranted.

Finally, at the extreme of totalitarian power we have the greatest extreme of democide. Communist governments have almost without exception wielded the most absolute power and their greatest killing (such as during Stalin's reign or the height of Mao's power) has taken place when they have been in their own history most totalitarian. As most communist governments underwent increasing liberalization and a loosening of centralized power in the 1960s through the 1980s, the pace of killing dropped off sharply.

Communism has been the greatest social engineering experiment we have ever seen. It failed utterly and in doing so it killed over 100,000,000 men, women, and children, not to mention the near 30,000,000 of its subjects that died in its often aggressive wars and the rebellions it provoked. But there is a larger lesson to be learned from this horrendous sacrifice to one ideology. That is that no one can be trusted with power. The more power the center has to impose the beliefs of an ideological or religious elite or impose the whims of a dictator, the more likely human lives are to be sacrificed. This is but one reason, but perhaps the most important one, for fostering liberal democracy.

Friday, December 18, 2009


America Under Barack Obama
... I try to avoid hyperbole, but I think Obama is possibly the most dangerous and destructive president we have ever had. An example is ObamaCare, which is now embattled in the Senate. If that goes through the way Obama wants, we will have something very much like the British system. If the American people have their health care paid for by the government, depending on their age and their condition, they will be subject to a health commission just like in England which will decide if their lives are worth living much longer.

In terms of the Patriot Act, and all the other things he has pledged he would do, such as transparency in government, Obama has reneged on his promises. He pledged to end torture, but he has continued the CIA renditions where you kidnap people and send them to another country to be interrogated. Why is Obama doing that if he doesn't want torture anymore? Throughout Obama's career, he promised to limit the state secrets doctrine which the Bush-Cheney administration had abused enormously. The Bush administration would go into court on any kind of a case that they thought might embarrass them and would argue that it was a state secret and the case should not be continued. Obama is doing the same thing, even though he promised not to.

So in answer to your question, I am beginning to think that this guy is a phony. Obama seems to have no firm principles that I can discern that he will adhere to. His only principle is his own aggrandizement. This is a very dangerous mindset for a president to have....

...In fact, we have never had more invasions of privacy than we have now. The Fourth Amendment is on life support and the chief agent of that is the National Security Agency. The NSA has the capacity to keep track of everything we do on the phone and on the internet. Obama has done nothing about that. In fact, he has perpetuated it. He has absolutely no judicial supervision of all of this. So all in all, Obama is a disaster.....

U.N. chief weighs in on climate talk expectations
...How can you scrap the role of the United Nations? The United Nations has global reach.

The United Nations will be there and should be involved in this implementation process.

One of the principles agreed upon is that all commitments should be reportable, measurable and verifiable. This is what has been agreed by both developed and developing countries.

We will establish a global governance structure to monitor and manage the implementation of this. Experts from both worlds should participate....

'Cadillac Tax' in Health Plan Would Hit Middle Class Hard
...The levy has been dubbed the "Cadillac tax," but research shows it would likely affect a broad swath of Americans regardless of their income, which could indeed amount to the tax on the middle-class that President Obama promised would not happen under his administration. The tax is a growing source of anxiety for Huber and his co-workers, but also for Democrats in the House, who vow to strip the measure out of the bill in conference or consider bringing the bill down altogether.

The confusion surrounding the tax comes from its complexity and the luxury car it is named for. When President Obama first raised the idea of taxing insurance companies this summer, he framed it as one way to get Wall Street executives to pay their fair share. Obama told PBS' Jim Lehrer he wanted to target "super, gold-plated Cadillac plans." Days later, Obama's senior adviser David Axelrod told The New York Times the administration wanted to tax benefits "like the ones that the executives at Goldman Sachs have, the $40,000 policies."

At the time, Obama said he did not want the tax to hit middle-class families, but when the bill emerged from the Senate Finance Committee in September, it proposed charging insurance companies and a 40 percent excise tax for high-dollar -- but not exactly gold-plated -- plans. The bill now calls for the tax to apply to plans exceeding $8,500 for individuals and $23,000 for families, for the cost of combining health savings accounts, medical, prescription drugs, dental, vision, etc. The tax is charged to insurance companies, but it is widely assumed they would pass it on to employers....

...Rep. Joe Courtney (D-Conn.) opposes the tax and recently described the "searing moment" six weeks ago when he realized that the excise tax would affect school teachers in his coastal Connecticut district, whose 2010 contracts include health plans well above the Senate thresholds.

"The description of this, that is was some kind of a group of Americans that were at the top strata, and that the middle class would not be affected by it, was clearly not the case," he said. ...

A Toast to ReidCare's Demise
...As its name suggests, it would allow 55- to 64-year-olds to buy into Medicare, a program that is currently reserved for seniors 65 and older. But Medicare already faces a projected deficit of $50 trillion to $100 trillion over the long term. It is on track to go bankrupt in eight years even without ReidCare. With ReidCare, its demise would have been greatly expedited.

No one, however, expects the left to be exercised over the fiscal lunacy of the buy-in idea. Indeed, as far as it is concerned, the faster people are crammed into Medicare, the better it is because the fiscal hole this will create will have to be plugged with higher taxes that could ultimately be applied toward universal health coverage. Nor should anyone be surprised if the left shed no tears for all the underpaid Medicare providers who would have been driven out of business if Medicare expanded its market share. This too is a necessary prerequisite for government-run health care.

But what the left should care about is what the Medicare buy-in would have done to the program's target group: the 55- to 64-year-old uninsured. ReidCare will raise Medicaid eligibility to 150 percent of the poverty level—which means near-free health care would be given to all couples, young and old, who make up to $21,855. But what about couples in this age group making, say, $22,000? They won't qualify for Medicaid. The Medicare buy-in, likely their best option, would have cost them around $15,200, according to an analysis by the Congressional Budget Office of a previous proposal. Individuals making over 150 percent of the poverty level, or $16,500, would have had to pay $7,600.

In other words, come 2011, when the individual mandate will kick in—if Democrats succeed—the uninsured working poor in the 55-to-64 age group would have had to fork over a whopping 50 percent to 70 percent of their income to buy into Medicare. Sen. Reid planned to help these folks with subsidies ... by 2014. But what were they supposed to live on until then? His good intentions? How could he and his comrades in good conscience believe it is right to force people to buy coverage now—under threat of fines or jail, mind you—while leaving any relief to the vagaries of politics years from now?...

How the “Independent” Fourth Estate Has Failed in its Critical Duty
In a discussion on WAMU Radio yesterday, host Kojo Nnamdi noted that vagueness in the federal criminal law has recently made “strange bedfellows” of the political left and right. This same “emerging consensus” was also the subject of an insightful November 23 article by Adam Liptak, The New York Times’ Supreme Court reporter.

What has occasioned this coming together? As I mentioned here on Monday, individuals and organizations of all political stripes are realizing the danger to all when prosecutors are empowered with exceedingly broad and—worse—hard-to-define federal laws. A diverse coalition of groups—including the Heritage Foundation, the Federalist Society, the Cato Institute, the National Association of Criminal Defense Lawyers, and the ACLU, among others—have been sounding a clarion call against this species of executive expansion. They have pointed out that, from webmasters to fund managers, no segment of civil society is safe.

But this phenomenon is not new. As I document in Three Felonies a Day, the proliferation of vague laws—and prosecutions under them—began in the mid-1980s. Why has widespread recognition, especially from the American public, taken so long?...

...But the press corps itself is ultimately responsible for the one-sided coverage of what I call “three-felonies-a-day” cases (a reference to my new book, Three Felonies a Day: How the Feds Target the Innocent). The fact is that there is an unseemly relationship between the Department of Justice and much of the news media. While in some areas the press and the DOJ have developed an appropriately adversarial, or at least skeptical relationship, by and large the DOJ plays the press corps like a fiddle.

Consider the Houston Chronicle’s slanted coverage of the arrest, indictment, and trial of former Enron President Jeffrey Skilling, convicted in May 2006 on charges of conspiracy, securities fraud and depriving the now-defunct Houston-based energy company of his “honest services.” Vitriol for Skilling was not limited to the Chronicle’s opinion pages; news articles, sports stories, and columnists vilified Skilling well before his day in court. Despite affirming his conviction, the Fifth Circuit Court of Appeals ruled that the media coverage created a community prejudice against Skilling. The three-judge panel wrote (PDF) that the Chronicle published “nearly one hundred…personal interest stories in which sympathetic individuals expressed feelings of anger and betrayal toward Enron,” and that even “the Chronicle’s ‘Pethouse Pet of the Week’ section mentioned that a pet had ‘enjoyed watching those Enron jerks being led away in handcuffs.’” (Emphasis in original) In Houston, the so-called Fourth Estate played the role of prosecutorial lapdog.

The Supreme Court decided on October 13 to review the Skilling case as part of its trio of honest services cases this term, and one of the issues on appeal is the extent to which jury prejudice affected the verdict. But, if the previous hearing on honest services is any indication, the justices will use the Skilling case to look at the broader constitutional due process question surrounding the infamously vague 28-word fraud provision. Oral argument is set for March 1....

Gene Healy: Making criminals out of all Americans
...The Founders viewed the criminal sanction as a last resort, reserved for serious offenses, clearly defined, so ordinary citizens would know whether they were violating the law.

Yet over the last 40 years, an unholy alliance of big-business-hating liberals and tough-on-crime conservatives has made criminalization the first line of attack -- a way to demonstrate seriousness about the social problem of the month, whether it's corporate scandals or e-mail spam.

At one point on Tuesday, Breyer protested: "I thought there was a principle that a citizen is supposed to be able to understand the criminal law." Good luck with that.

There are now more than 4,000 federal crimes, spread out through some 27,000 pages of the U.S. Code. Some years ago, analysts at the Congressional Research Service tried to count the number of separate offenses on the books, and gave up, lacking the resources to get the job done. If teams of legal researchers can't make sense of the federal criminal code, obviously, ordinary citizens don't stand a chance.

You can serve federal time for interstate transport of water hyacinths, trafficking in unlicensed dentures, or misappropriating the likeness of Woodsy Owl and his associated slogan, "Give a hoot, don't pollute." ("What are you in for, kid?" your new cellmate growls.) Bills currently before Congress would send Americans to federal prison for eating horsemeat or selling goods falsely labeled as "Native American."

"Is that the system we have, that Congress can say, nobody shall do any bad things?" an exasperated Scalia asked Drebeen. The system we have comes pretty close, unfortunately. And a federal criminal code that covers everything delegates to prosecutors and the police the power to pick their targets at will, leaving everyone at risk....

Banker Baiting 101
...A recent NFIB survey of small-business owners found only 10% reporting problems obtaining financing. The government's own data tell a similar story. The Federal Reserve reports that business loan demand remains at depressed levels, while data from the Federal Deposit Insurance Corporation show $6 trillion of unused lending commitments at FDIC-insured institutions.

Mr. Dennis reports that small-business owners are much more concerned about other Washington issues, namely the uncertainty created by the Obama policy agenda: When will the taxes arrive to pay for Washington's spending binge? How much will health-care reform cost? What will be the impact of cap-and-trade legislation to address climate change?

Mr. Obama summed up his White House meeting with the bank CEOs by once again blaming them for the financial crisis and suggesting that they have an obligation to support new regulation being written by Barney Frank (D., Mass.) and Senator Chris Dodd (D., Conn.).

You have to smile at that irony. No two Members of Congress did more to encourage the financial crisis, by preventing reform of the government-sponsored housing behemoths Fannie Mae and Freddie Mac. By ignoring Washington's role in creating the credit mania, Mr. Obama is hardly offering confidence that his financial reform efforts will prevent a repeat.

Yet none of this seems to count for much at a White House that is reading the polls and sees a political opening because bankers aren't popular. Someone in that power palace ought to consider that you don't encourage capitalism by beating up capitalists, and you aren't likely to encourage more lending by whipsawing lenders.

How to Manufacture a Climate Consensus
...The bible I'm referring to, of course, is the refereed scientific literature. It's our canon, and it's all we have really had to go on in climate science (until the Internet has so rudely interrupted). When scientists make putative compendia of that literature, such as is done by the U.N. climate change panel every six years, the writers assume that the peer-reviewed literature is a true and unbiased sample of the state of climate science.

...That can no longer be the case. The alliance of scientists at East Anglia, Penn State and the University Corporation for Atmospheric Research (in Boulder, Colo.) has done its best to bias it.

A refereed journal, Climate Research, published two particular papers that offended Michael Mann of Penn State and Tom Wigley of the University Corporation for Atmospheric Research. One of the papers, published in 2003 by Willie Soon and Sallie Baliunas (of the Harvard-Smithsonian Center for Astrophysics), was a meta-analysis of dozens of "paleoclimate" studies that extended back 1,000 years. They concluded that 20th-century temperatures could not confidently be considered to be warmer than those indicated at the beginning of the last millennium....

...Messrs. Mann and Wigley also didn't like a paper I published in Climate Research in 2002. It said human activity was warming surface temperatures, and that this was consistent with the mathematical form (but not the size) of projections from computer models. Why? The magnitude of the warming in CRU's own data was not as great as in the models, so therefore the models merely were a bit enthusiastic about the effects of atmospheric carbon dioxide.

Mr. Mann called upon his colleagues to try and put Climate Research out of business. "Perhaps we should encourage our colleagues in the climate research community to no longer submit to, or cite papers in, this journal," he wrote in one of the emails. "We would also need to consider what we tell or request of our more reasonable colleagues who currently sit on the editorial board."

After Messrs. Jones and Mann threatened a boycott of publications and reviews, half the editorial board of Climate Research resigned. People who didn't toe Messrs. Wigley, Mann and Jones's line began to experience increasing difficulty in publishing their results.

This happened to me and to the University of Alabama's Roy Spencer, who also hypothesized that global warming is likely to be modest. Others surely stopped trying, tiring of summary rejections of good work by editors scared of the mob. Sallie Baliunas, for example, has disappeared from the scientific scene.

GRL is a very popular refereed journal. Mr. Wigley was concerned that one of the editors was "in the skeptics camp." He emailed Michael Mann to say that "if we can find documentary evidence of this, we could go through official . . . channels to get him ousted."

Mr. Mann wrote to Mr. Wigley on Nov. 20, 2005 that "It's one thing to lose 'Climate Research.' We can't afford to lose GRL." In this context, "losing" obviously means the publication of anything that they did not approve of on global warming. ...

Climategate: McIntyre and the ‘Divergence Problem’
It’s been less than a month since the Climategate files were first disclosed, but they’ve already had a dramatic impact on the debate over climate change.

On the one hand is the dominant so-called consensus — that human emission of greenhouse gases has been the primary cause of an unprecedented warming of Earth’s climate. On the other hand, there has been an underground opposition trying to make itself heard. What the disclosure of the files did was demonstrate that these opposition voices had been suppressed unfairly and unscientifically.

As a result, the raw data that had been withheld is becoming available to outside researchers. This new openness is already having results.

Steve McIntyre of Climate Audit has done a careful analysis of the Climategate emails that affect one particular issue — the “tricks” that were applied to the data in composing the various reports. The particular issue McIntyre is considering is called “the divergence problem.” When we measure temperatures now, of course, we use a thermometer. For historical temperatures, however, reliable thermometers weren’t available until about 1724, with Fahrenheit’s mercury thermometer. And regular records of temperature weren’t done until some years later. (Thomas Jefferson was one of the first people to make regular temperature records.)...

...The green line is the version we saw above as part of the IPCC report, and the red line is the full series — which goes down rather dramatically, instead of up as the story suggested. If the full Briffa series had been included, the figure would look rather different. The hook upward, the blade of the hockey stick, would have been much less dramatic, the implied global warming much less significant. By truncating the data as they did, the global warming looks much worse....

Edwards Deming meets No Child Left Behind
Current appearances to the contrary notwithstanding, the health care debate will not, in fact, go on forever. One of the items on the post-health-care agenda is reauthorization of the Elementary and Secondary Education Act (ESEA), as modified by the No Child Left Behind bill passed in 2002.

One of the striking features about NCLB is the primitive evaluation mechanism it employs. It’s pure defect-finding: measuring the percentages of kids of different types who fail to achieve some standard, as measured by standardized tests. Henry Ford would recognize it. W. Edwards Deming would be appalled by it.

Statistical quality assurance depends on sampling, not census inspection; on paying attention to the entire range of outcomes, not just whether a given outcome meets or fails to meet some standard; and on process. And it is continuous and interactive rather than purely retrospective. In Deming’s world, the purpose of quality assurance is to feed back information about processes and their outcomes to operators so the processes can be changed in real time.

One of the reason Honda and Toyota ate General Motors’s lunch is that the Japanese car companies adopted statistical quality assurance while Detroit was still inspecting every part coming off the assembly line to see whether it was within tolerance. Why are we using those same outdated principles to manage the much more complicated problem of teaching children to read, write, and reckon?...

Paul Krugman's Selective Effigies
The New York Times columnist on Aug. 7:

Some commentators have tried to play down the mob aspect of these scenes, likening the campaign against health reform to the campaign against Social Security privatization back in 2005. But there's no comparison. I've gone through many news reports from 2005, and while anti-privatization activists were sometimes raucous and rude, I can't find any examples of congressmen shouted down, congressmen hanged in effigy, congressmen surrounded and followed by taunting crowds. [...]

So this is something new and ugly.

Krugman today:

A message to progressives: By all means, hang Senator Joe Lieberman in effigy.
...

Mad men
That splashing sound you hear is liberals jumping off the health care ship.

For all the talk of a Republican civil war earlier this year, it is remarkable to watch the left wing of the Democratic Party splitting off and vowing to defeat the measure that has been President Obama's top priority.

Finger-pointing is common when legislation is teetering on the brink, but the level of vitriol that has erupted in the past couple of days is nothing short of stunning.

Some liberals are angry at Howard Dean for suddenly leading the charge against the Senate bill. Others are furious at Joe Lieberman for forcing his former party to drop the remnants of a public option and Medicare buy-in. Still others are blaming Obama for letting this thing turn into an increasingly unpopular morass. ...

...Is it still worth passing? The president certainly didn't campaign for a public option. But to add, say, 30 million Americans to the health insurance system through a mandate -- a laudable goal, on the surface -- could really lead to soaring costs without a strong mechanism to keep prices under control. And that seems to be lacking, especially given Congress' record on calling for cuts in programs like Medicare but flinching when it's time to carry them out. ...

Inconvenient truth for Al Gore as his North Pole sums don't add up
There are many kinds of truth. Al Gore was poleaxed by an inconvenient one yesterday.

The former US Vice-President, who became an unlikely figurehead for the green movement after narrating the Oscar-winning documentary An Inconvenient Truth, became entangled in a new climate change “spin” row.

Mr Gore, speaking at the Copenhagen climate change summit, stated the latest research showed that the Arctic could be completely ice-free in five years.

In his speech, Mr Gore told the conference: “These figures are fresh. Some of the models suggest to Dr [Wieslav] Maslowski that there is a 75 per cent chance that the entire north polar ice cap, during the summer months, could be completely ice-free within five to seven years.”

However, the climatologist whose work Mr Gore was relying upon dropped the former Vice-President in the water with an icy blast.

“It’s unclear to me how this figure was arrived at,” Dr Maslowski said. “I would never try to estimate likelihood at anything as exact as this.”...

A busy man
Seek and ye will find, as Bishop Hill notes. Our friendly part-time chairman of the IPCC, Dr Rajendra Kumar Pachauri, is quite a remarkable man. As well as his onerous post with the UN's IPCC, it seems he has a considerable number of other interests. ...

...Intriguingly, for such an upstanding public servant though, he is also a strategic advisor to the private equity investment firm Pegasus Capital Advisors LP, which he became in February of this year. However, this is by no means Dr Pachauri's only foray into the world of finance. In December 2007, be became a member of the Senior Advisory Board of Siderian ventures based in San Francisco.

This is a venture capital business owned by the Dutch multinational business incubator and operator in sustainable technology, Tendris Holding, itself part-owned by electronics giant Philips. It acquired a minority interest in January 2009 in order to "explore new business opportunities in the area of sustainability." As a member of the Senior Advisory Board of Siderian, Dr Pachauri is expected to provide the Fund and its portfolio companies "with access, standing and industry exposure at the highest level."

In June 2008, Dr Pachauri became a member of the Board of the Nordic bank Glitnir, which that year launched the The Sustainable Future Fund, Iceland, a new savings account "designed to help the environment." Then, the fund was expected to accumulate up to €4 billion within a few years, thus becoming one of the largest private funds supporting research into sustainable development. That same month of June 2008, Dr Pachauri also became Chairman of the Indochina Sustainable Infrastructure Fund. Under its CEO Rick Mayo Smith, it was looking to raise at least $100 billion from the private sector.

The previous April 2008 was also a busy month. Dr Pachauri joined the Board of the Credit Suisse Research Institute, Zurich and became a member of the Advisory Group for the Rockefeller Foundation, USA. Then, in May he became a member of the Board of the International Risk Governance Council in Geneva. This, despite its name, is primarily concerned with the promotion of bioenergy, drawing funding from electricity giants EON and EDF. But, not content with that, Dr Pachauri also became Chairman and Member of the Advisory Group at the Asian Development Bank that May. At some time, he also became a Member of the Climate Change Advisory Board of Deutsche Bank AG. ...