on January 18, 2010
To Accompany the January 18, 2010 edition of Tidbits
Bob Jensen at Trinity University
John Carney and Kamelia Angelova, ClusterStock, January 5, 2010
"The Great D.C. Migration: Americans move to where your money is,"
The Wall Street Journal, January 20, 2010 ---
Every day thousands of Americans vote with their feet on the best places to live and work, and these migration patterns can tell a lot about state economies—and economic policies. United Van Lines has released its annual report for 2009, based on those the moving company has relocated across one state line to another, and the winner is . . .
But first the biggest loser, which was Michigan for the fourth year in a row. More than two families left the state for every family that moved in. The fall of GM and Chrysler has obviously hurt. But two-term Governor Jennifer Granholm has also made her state the test case for the policy mix of raising taxes on higher incomes, increasing regulation, and steering taxpayer money at favored programs like job retraining and renewable energy. It hasn't worked for Michigan, even with the auto bailouts.
Ms. Granholm continues to be a regular economic policy adviser to the White House. Yikes.
The next two biggest net losers were Illinois and New Jersey, while California and New York also continued to have far more departures than arrivals.
Ten states gained net arrivals: Oregon, Arkansas, Nevada, Wyoming, Idaho, Colorado, Georgia, New Mexico, Texas and North Carolina. Of those, only Oregon sways decidedly to the political left and it has benefited from the economic refugees fleeing California.
Six of the eight states with no income tax were magnets for families, while eight of the 10 highest income tax states had more people packing. Democrats in state capitals and Washington have convinced themselves that "soak the rich" tax policies can help balance budgets, but the main effect seems to be to stimulate bon voyage parties.
As for the biggest winner, well, our readers won't be surprised to learn that it was Washington, D.C. by a large margin. United Van Lines moved nearly seven families to the federal city last year for every three it moved out. As always when the feds gear up the income redistribution machine, the imperial city and its denizens get a big cut of the action.
As in ancient Rome, the provinces are being required to send tribute to subsidize those living in the capital, which produces few services save transfer payments. No wonder the provincials are starting to rebel—even in Massachusetts.
Bob Jensen's threads on the entitlements disasters are at
How Can We Help Haiti --- http://www.insidehighered.com/views/2010/01/15/fitzsimmons
When we see what
we did at the climate summit in Copenhagen, this is the response, this is what
happens, you know what I’m sayin’?
Super Scientist Danny Glover explaining what really caused the 7.0 earthquake near Haiti
U.S. Debt/Deficit Clock --- http://www.usdebtclock.org/
Video: Larry Summers: Innovation and
Economic Growth ---
From The New Yorker: Interviews
With the Chicago Economists
"Interview with James Heckman," by John Cassidy, The New Yorker, January 14, 2010 ---
"4 Economic Scenarios You'd Better Hope Won't
Materialize," by Rick Newman, Seeking Alpha, January 14, 2010 ---
Fraud Updates have been posted up to December 31, 2009 ---
Also see http://www.trinity.edu/rjensen/Fraud.htm
Also see http://www.trinity.edu/rjensen/fraud001.htm
Yemen Releases Six Former Gitmo Despite Promises to Obama
Its not a surprise the six detainees transferred from Gitmo to Yemen were released within a week of their return to Yemen, and its no surprise that the Saleh government in Yemen lied to the US with its pledge of continued detention. What's shocking is that anyone on the US side actually believed them to start with. The Heritage Foundation has some advice on Terrorist Transfers from Gitmo to Yemen: Strictly monitor for at least a year the six Guantanamo Yemenis just transferred to Yemen. According to news reports, the Yemeni government has agreed to detain them indefinitely.
The Jawa Report, January 6, 2010 --- http://mypetjawa.mu.nu/archives/200302.php
The Pentagon says
more of the terror suspects released from the Guantanamo Bay prison are
returning to the fight. Defense Department press secretary Geoff Morrell says a
new report shows the recidivism rate among former suspects released from the
prison in Cuba continues its upward trend. He did not release the figures, but
said officials are working to declassify the latest report so the rate can be
Associated Press --- http://www.breitbart.com/article.php?id=D9D2EE100&show_article=1
"What Our Spies Can Learn From Toyota:
We have 16 separate intelligence agencies. No wonder people aren't connecting
the dots, by Luis Garicano and Richard A. Posner, The Wall Street Journal,
January 12, 2010 ---
Until recently, the United States had become complacent about terrorism. The general view was that al Qaeda was on the run and Islamic terrorism was a receding threat. We now know better.
A string of attacks by Islamic terrorists—an officer murdering his fellow soldiers at a U.S. army base, a passenger's attempted bombing on a Detroit-bound airplane, and a double agent's suicide bombing a CIA base in Afghanistan—reveals the continuing and growing danger of Islamic terrorism. Hostility to the U.S. appears to be increasing among Muslim populations, and, with it, the number of potential terrorists. It is alarming that none of the three attackers—an American, a Nigerian and a Jordanian—was from one of the traditional hotbeds of terrorism.
In the case of the first two attacks, information that should have alerted the security services to the danger of an attack was in their hands but was not acted on. And this despite the restructuring of the national intelligence system after the 9/11 attacks. These failures are only the latest evidence that the post-9/11 reforms have not been a success.
Real reform of complex institutions is always hard, but it is possible. Consider a storied, historic, indeed iconic American institution that had developed an internal structure so convoluted that information did not flow through it—fiefdoms abounded, and duplication and delays were the rule. After many failed efforts at reform, only the threat and actuality of bankruptcy forced this institution to slim down, streamline and focus.
We are referring, of course, to the U.S. auto industry. The domestic automakers' organizational structures were notoriously complex and top-heavy. While Toyota had been selling the same car worldwide, Ford had insisted that American consumers would not buy the cars successfully produced by Ford for sale in Europe. As a result, every stage of production from R&D to actual manufacturing was duplicated in the two markets.
When General Motors dealers in Florida tried to stop GM from promoting its SUVs in the state's 70-degree Christmas season with ads bragging about the vehicles' performance in snow, they found no way to get their message across. GM had 325,000 employees, yet was run as a matrix with overlapping functional and geographic management structures. As Rick Wagoner, its ousted CEO, had confessed: "People really have trouble because they want to know who's in charge," he said, "and the answer is going to be, increasingly: It depends."
The national intelligence apparatus of the U.S. has fewer employees than GM had in its prime, yet it consists officially of 16 separate agencies, and unofficially of more than 20. Each of these agencies is protected by strong political and bureaucratic constituencies, so that after each intelligence failure everything continues pretty much the same and usually with the same people in charge.
Five and a half years after the report of the 9/11 Commission identified the cascade of intelligence failures that allowed the 9/11 attackers to achieve total surprise, the problems it highlighted persist: We learn of multiple, separate and unshared terrorist lists; of multiple agencies (State Department, CIA and the National Counterterrorism Center) unable to combine the tips they receive; of arbitrary rules, such as requiring proof of "reasonable suspicion," rather than mere suspicion, to deny a visa to a foreigner; and of terrorists released from American custody to become leaders of al Qaeda abroad. There is the sense that nobody is in charge.
The government's response to the attempted airline bombing—the most recent failure—has been to blame every agency that had some information that if pooled would have alerted the airport authorities to the menace of Abdulmutallab. To blame all is to blame none.
We have an unwieldy multiplicity of agencies that operate largely independently. Dysfunctional bureaucratic incentives decree that an attack involving a repetition of a known terrorist procedure is the most damaging politically, so shoes are scanned because a shoe was used in an attempted airplane bombing. Now underwear will be scanned as well. The government seems always to be playing catch-up to the terrorists.
We can fix this. As with the auto industry, the moment of crisis is the right moment to tackle in-depth reform of the intelligence services. One possibility that deserves serious consideration would be a consolidation of most existing agencies into four primary agencies: a foreign intelligence agency, a military intelligence agency, a domestic intelligence agency, and a technical data collection agency (satellite mapping, electronic interception, etc.).
This structure would mimic the United Kingdom's MI6 (the Secret Intelligence Service), Defence Intelligence Agency, MI5 (the Security Service), and GCHQ (General Communications Headquarters). In a streamlined system, the Director of National Intelligence would be a coordinator, rather than combining the role of a coordinator with that of the president's senior substantive intelligence officer. (As if the CEO of Boeing also designed the companies planes).
The members of our intelligence community will protest that simplifying the structure of the intelligence community is impossible—echoing the protests of auto workers, until bankruptcy forced their hand. The national intelligence system is similarly bankrupt: More than eight years after the 9/11 attacks, there is no excuse for such egregious failures. The time to act is now.
Mr. Garicano is a professor of management and economics at the London School of Economics. Mr. Posner, a federal circuit judge and a senior lecturer at the University of Chicago Law School, is the author of "A Failure of Capitalism: The Crisis of '08 and the Descent Into Depression" (Harvard, 2009).
How Can We Help Haiti --- http://www.insidehighered.com/views/2010/01/15/fitzsimmons
When we see what
we did at the climate summit in Copenhagen, this is the response, this is what
happens, you know what I’m sayin’?
Super Scientist Danny Glover explaining what really caused the 7.0 earthquake near Haiti
"Pat Robertson Is No Joke," by John
L. Jackson , Jr., Chronicle of Higher Education, January 14, 2010 ---
I got the surreal news (via text message) about the Haitian disaster on an Amtrak train from Washington, D.C. to Philadelphia Tuesday evening (after attending the AAA symposium on race that I blogged about on Monday). And it just so happens that I was reading, in an almost eerie kind of irony, a small new book by Susan Buck-Morss during that train ride, Hegel, Haiti, and Universal History.
The book is an extrapolation on her Critical Inquiry article (from 2000) where she tried to argue that Hegel got his master-slave metaphor from the Haitian revolution, and that such a seemingly clear and self-evident historical fact has been sorely under-appreciated (in fact, missed just about entirely) by the best and brightest philosophers and historians who have worked on Hegel. She chalks these omissions up to a series of factors, including the narrowcast biases of disciplinization and academic specialization. Buck-Morss maintains that the early Hegel was clearly influenced and inspired by the Haitian revolt (championing the psychic need for slaves to forcibly reclaim their full humanity by asserting it in the face of brutal reprisals), even if the later Hegel (of The Philosophy of History) ends up dismissing all of Africa as radically ahistorical, uncivilized, and unprepared for full sovereignty.
In many ways, Robertson's pseudo-religious reading of the Haitian tragedy is a sensationalized version of the very logics that Buck-Morss critiques.
I call it "pseudo-religious" because I think of Robertson's comments as self-serving political claims hiding behind the cloak of religiosity. Of course, religion is inescapably political, but Robertson's own religious texts don't provide evidence for such wildly specific and offensive claims of Satanic collusion. On what evidence, from what sacred book, does Robertson base his theory of Haitian history (or any of his past pronouncements, including the "argument" that 9/11 was divine retribution for America's legalization of abortion)? Is he merely performing a xenophobic reading of Voodoo's spiritual difference from his particular version of Christianity?
Instead of seeing 18th- and 19th-century Haitian freedom fighters as subjects of history, agents capable of throwing off the shackles of foreign oppression (in a manner similar to America's 18th-century revolutionists, a group that I've never heard him call lapdogs of Satan), Robertson removes them from the political and geopolitical playing field altogether, dismissing their post-revolutionary plight as comeuppance for a bad deal with the devil. About that theory, two last things:
First, I would recommend that Robertson read Randall Robinson's An Unbroken Agony: Haiti, from Revolution to the Kidnapping of a President, which shows, quite compellingly, that Haiti's current politico-economic predicament is a direct result of how Europe and the United States responded to the country's 1804 assertion of autonomy: by very purposefully isolating and exploiting Haiti (politically and economically) for the next two hundred years. Therein lies much of the answer, Robinson demonstrates, to Haiti's current woes. (The details he provides, mostly uncontested and unhidden facts of history, will be shocking to many readers).
Second, if the Satan theory is accurate, I would ask that Robertson finally let them out of their contract with him. As a function of the kinds of horrible and inhumane ideas he spews, Robertson must be the other contractual party of which he would explain how he knows so much about such a secret compact/
Continued in article
The Top 10 Quotes From Barack Obama in
"OPINION: DECLARATIONS JANUARY 14, 2010,
7:02 P.M. ET Slug the Obama Story 'Disconnect'." by Peggy Noonan, The Wall
Street Journal, January 14, 2010 ---
Until now Peggy Noonan, as a correspondent for the WSJ, has pretty much sounded like a speech writer for MSNBC's Keith Olbermann and Chris Matthews on the subject of President Obama. Now she's raising some doubts.
Yet—and this is the key part—the president does not seem to see or hear. He does not respond. He is not supple, able to hear reservations and see opposition and change tack. He has a grim determination to bull this thing through. He negotiates each day with Congress, not with the people. But the people hate Congress! Has he not noticed?
The people have come alive on the issue of spending—it's too high, it threatens us! He spends more. Everywhere I go, I hear talk of "hidden taxes" and a certainty that state and federal levies will go up, putting a squeeze on a middle and upper middle classes that have been squeezed like oranges and are beginning to see themselves as tired old rinds. Mr. Obama seems at best disconnected from this anxiety.
The disconnect harms him politically, but more important it suggests a deepening gulf between the people and their government, which only adds to growling, chafing national discontent. It also put the president in the position, only one year in, only 12 months into a brand-new glistening presidency, of seeming like the same old same old. There's something tired in all this disconnect, something old-fashioned, something sclerotic and 1970's about it.
And of course the public is reacting. All politicians are canaries in coal mines, they're always the first to feel the political atmosphere. It was significant when the Democrats lost the governorships of Virginia and New Jersey two months ago. It is significant that a handful of House and Senate Democrats have decided not to run this year. And it is deeply significant that a Republican state senator in Massachusetts, Scott Brown, may topple the Democratic nominee to fill Ted Kennedy's former seat, Martha Coakley. In a way, the Republicans have already won—it's a real race, it's close, and in "Don't blame me, I'm from Massachusetts"!
Continued in article
"Barack Obama admits failure to unite
the US: President Barack Obama has admitted he failed to unite Americans
and change the way Washington works during his first year in office," by
Alex Spillious, London Telegraph, January 14, 2010 ---
With his approval ratings falling below 50 per cent, Mr Obama confessed his disappointment at not delivering key pledges of his campaign.
"What I haven't been able to do in the midst of this crisis is bring the country together in a way that we had done in the inauguration," he told People magazine. "That's what's been lost this year ... that whole sense of changing how Washington works."
Mr Obama, who will mark a year in office next Wednesday, came to power amid a surge of optimism that he could unify Democrats and Republicans at a time of national distress, and reverse the bitter polarity of the George W Bush era.
Instead, there has been little collaboration between the parties in Congress while floating voters who turned out en masse for Mr Obama have deserted him in opinion polls. His approval ratings have tumbled down from the mid-to-high 60s when he took over.
In a Quinnipiac University poll, there was even a narrow margin among respondents of 35 to 37 per cent on whether the United States would have been better off had Obama's Republican opponent John McCain won the 2008 election.
Mr Obama's first year has seen him battle the worst economic crisis in 70 years, juggle two wars and contend with a revived al-Qaeda threat.
High unemployment, slow progress of health care reform and vast bailouts to Wall Street have done most to damage his approval rating.
The president recognised that Americans' disappointment at progress made so far was inevitable.
"They have every right to feel deflated because the economy was far worse than any of us expected,'" he said. "The day I was sworn in, we now know that we were in the process of losing 650,000 jobs in December and 700,000 jobs in January, another 650,000 in March. So people rightly have been anxious this year."
He does however remain popular as a person and as a leader, with 64 per cent of those asked by CNN saying Mr Obama had the "personality and leadership" qualities required of a president.
Polls also showed better news for the White House on national security, despite withering Republican attacks on his handling of al-Qaeda's attempt to bring down a US-bound jet carrying 290 people on Christmas Day.
CNN found that 57 per cent approved of the way the president had managed the attack, compared to 29 per cent who disapproved.
Despite his disappointment, he said that the passage of health care reform, which is expected over the next month, would be his proudest moment so far.
"Having a health-care bill through the House and the Senate is a potentially historic accomplishment. I'll be that much prouder when I actually sign it," he said.
"OMB's Fuzzy Math," by Jillian Bandes, Townhall, January 13,
The Office of Management and Budget has calculated jobs that are “saved or created” by the Recovery Act through non-existent congressional districts, phantom ZIP codes, and questionable accounting practices. To remedy these problems (and in a perfectly-timed response to bad press) the OMB has decided to re-calculate “saved or created” jobs to include those that exist independent of any Recovery Act money in the first place.
In other words, the OMB has made their accounting on a $787 billion expenditure of taxpayer money completely meaningless.
OMB director Peter Orzag says the new approach provides a way for recipients to skip over making any kind of “subjective judgment” on how many jobs were saved or created by their receipt of Recovery Act money. In lieu of actual judgment, the OMB will automatically assume a job has been saved or created after a business gets its hands on Recovery Act money.
“Recipients will no longer be required to sum various data on hours worked across multiple quarters of data when calculating job estimates… recipients will more easily and objectively report on jobs funded with Recovery Act dollars,” said Orzag.
In other words, if a business receives $40,000 in Recovery Act dollars, a job is automatically tallied in the OMB ticker, regardless of whether that $40,000 went towards the actual salary of an employee or fancy office furniture. Businesses won’t even have to fudge the books to use the federal money towards things like catered lunches – non-salary expenses now qualify as a legitimate use of Recovery Act dollars.
Let’s say Joe has employed Bob for ten years, and has no plans on firing him anytime soon. When Joe suddenly receives $40,000 in Recovery Act money, Bob’s job is now the product of the Recovery Act, even though the job existed independently of that money. The new title for this accounting practice is saying that Bob’s job has been “funded” instead of “saved or created” – a phrase that, conveniently, has received the worst press.
If an employee receives a raise, that counts as a job, too. And the OMB wants the new calculations done fast, in time for the “rapidly approaching January reporting period,” just in time for President Obama’s State of the Union address. OMB announced the new changes on December 19th – that’s the Saturday before Christmas – and it wasn’t even noticed until a small nonprofit watchdog, ProPublica, noticed the memo a month later.
"The stimulus has been such a grand failure that the administration has stooped to unabashedly cooking the books," said Republican Study Committee Chairman Tom Price (R-GA). "Moving the goal posts and tinkering with math formulas won't put the country back to work. The ridiculous 'saved or created' label needed to go, but the administration's new stimulus metric is even more misleading.”
Phil Kerpen, the director of Americans for Prosperity, said that the bigger issue isn’t the accounting practices – instead, it’s the fact that government thinks it can create jobs in the first place.
“The bottom line is that every dollar government spends first has to be taxed, borrowed, or printed. How can government spending make us richer when all three of those options make us poorer?”
Let me conclude with a political note. The main reason for reform is to serve the nation. If we don’t get major financial reform now, we’re laying the foundations for the next crisis. But there are also political reasons to act. For there’s a populist rage building in this country, and President Obama’s kid-gloves treatment of the bankers has put Democrats on the wrong side of this rage. If Congressional Democrats don’t take a tough line with the banks in the months ahead, they will pay a big price in November.
Paul Krugman, Bubbles and the Banks," The New York Times, January 7, 2010 ---
"Democratic Payoffs, Er, Stimulus,"
by Mona Charen, Townhall, January 5, 2010 ---
When a non-American scholar I admired let slip a casual reference to "American corruption" a few years ago, my chauvinistic pride was wounded. This isn't Mexico, after all, or even Italy, where bribes are the normal social lubricant. Still, an unsentimental examination of government dollars at work seems to confirm my friend's observation.
A small example: The U.S. government has announced plans to spend $340 million on an advertising campaign to promote the Census, including $2.5 million for ads during the Super Bowl. Though the nation has been collecting this data for 220 years, it seems we now need commercial jingles to complete the forms. Or could there be another agenda? The government, reports The Hill newspaper, will target $80 million of those dollars to racial and ethnic minorities and non-English speakers -- groups that vote disproportionately Democratic. Nor will Democrats permit efforts to limit the count to those here legally. An effort by Sen. David Vitter, R-La., to exclude illegal aliens from the count went nowhere.
Illegal aliens don't (usually) vote, of course. But when they are counted in the Census, they do affect representation in the Congress. So some of the money you pay in taxes will go toward increasing the legislative clout of one party.
That same party has seen to its own perpetuation in other ways, too. Consider the $787 billion stimulus bill. Veronique de Rugy and Jerry Brito of George Mason University report that "a total of 56,399 contracts and grants totaling $157,028,362,536 were awarded in this first quarter for which Recovery.gov reports are available. The number of jobs claimed as created or saved is 638,826.54 -- an average of $245,807.51 per job."
But it gets more interesting. "There are 177 districts represented by Republicans and 259 represented by Democrats," they write. "On average, Democratic districts received 1.6 times more awards than Republican ones. The average number of awards per Republican district is 94, while the average number of awards per Democratic district is 152." Democratic districts also received nearly twice the dollar value of funds as Republican ones.
Continued in article
Bob Jensen's threads on the stimulus mess
"The cost of illegal immigration has exhausted the Arizona State Treasury. In order to pay for the federal government's responsibility of securing our national borders and incarcerating individuals who enter the United States illegally and commit crimes, the state has incurred hundreds of millions of dollars of debt to pay these bills," said Treasurer Dean Martin.
"Martin: Arizona taxpayers owed $1 billion from illegal immigration," KVOA, January 6, 2010 ---
Professor Blinder, a professor of economics and public affairs at Princeton University and vice chairman of the Promontory Interfinancial Network, is a former vice chairman of the Federal Reserve Board --- http://en.wikipedia.org/wiki/Alan_S._Blinder
"When Greed Is Not Good: Wall Street has quickly rediscovered the
virtues of mammoth paychecks. Why hasn't there been more financial reform?"
by Alan S. Blinder, The Wall Street Journal, January 11, 2010 ---
I hear Gordon Gekko is making a comeback. So is greed.
They say markets are alternately ruled by greed and fear. Well, our panic-stricken financial markets have been ruled by fear for so long that a little greed might serve as an elixir. But everybody knows you can overdose on an elixir.
When economists first heard Gekko's now-famous dictum, "Greed is good," they thought it a crude expression of Adam Smith's "Invisible Hand"—which is one of history's great ideas. But in Smith's vision, greed is socially beneficial only when properly harnessed and channeled. The necessary conditions include, among other things: appropriate incentives (for risk taking, etc.), effective competition, safeguards against exploitation of what economists call "asymmetric information" (as when a deceitful seller unloads junk on an unsuspecting buyer), regulators to enforce the rules and keep participants honest, and—when relevant—protection of taxpayers against pilferage or malfeasance by others. When these conditions fail to hold, greed is not good.
Plainly, they all failed in the financial crisis. Compensation and other types of incentives for risk taking were badly skewed. Corporate boards were asleep at the switch. Opacity reduced effective competition. Financial regulation was shamefully lax. Predators roamed the financial landscape, looting both legally and illegally. And when the Treasury and Federal Reserve rushed in to contain the damage, taxpayers were forced to pay dearly for the mistakes and avarice of others. If you want to know why the public is enraged, that, in a nutshell, is why.
American democracy is alleged to respond to public opinion, and incumbents are quaking in their boots. Yet we stand here in January 2010 with virtually the same legal and regulatory system we had when the crisis struck in the summer of 2007, with only minor changes in Wall Street business practices, and with greed returning big time. That's both amazing and scary. Without major financial reform, "it" can happen again.
It is true that regulators are much more watchful now, that Bernie Madoff is in jail (where he should have more company), and that much of "fancy finance" died a violent death in the marketplace. All good. But history shows that financial markets have a remarkable ability to forget the past and revert to their bad old ways. And we've made essentially no progress on lasting financial reform.
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Chad Crowe Perhaps reformers just need more patience. The Treasury made a fine set of proposals that the president's far-flung agenda left him little time to pursue—so far. The House of Representatives passed a pretty good financial reform bill late last year. And while there's been no action in the Senate as yet, at least they are talking about it. As Yogi Berra famously said, "it ain't over 'til it's over."
But I'm worried. The financial services industry, once so frightened that it scurried under the government's protective skirts, is now rediscovering the virtues of laissez faire and the joys of mammoth pay checks. Wall Street has mounted ferocious lobbying campaigns against virtually every meaningful aspect of reform, and their efforts seem to be paying off. Yes, the House passed a good bill. Yet it would have been even better but for several changes Financial Services Committee Chairman Barney Frank (D., Mass.) had to make to get it through the House. Though the populist political pot was boiling, lobbyists earned their keep.
I expect they'll earn more. Even before Senate Banking Committee Chairman Christopher Dodd (D., Conn.) announced his retirement, it appeared likely that any bill that could survive the Senate would be weaker than the House bill. Then came Mr. Dodd's announcement, which reshuffled the deck.
There are two diametrically opposed hypotheses about how his retirement will affect the legislation. Conventional wisdom holds that it is good news for reformers: Freed from crass political concerns, Mr. Dodd can now steer his committee more firmly toward a better bill. Let's hope so. But an opposing view reminds us that lame ducks lose power rapidly in power-mad Washington. To lead, someone must be willing to follow.
My fear is that a once-in-a-lifetime opportunity to build a sturdier and safer financial system is slipping away. Let's remember what happened to health-care reform (a success story!) as it meandered toward 60 votes in the Senate. The world's greatest deliberative body turned into a bizarre bazaar in which senators took turns holding the bill hostage to their pet cause (or favorite state). With zero Republican support, every one of the 60 members of the Democratic caucus held an effective veto—and several used it.
If financial reform receives the same treatment, we are in deep trouble, both politically and substantively.
To begin with the politics, recent patterns make it all too easy to imagine a Senate bill being bent toward the will of Republicans—who want weaker regulation—but then garnering no Republican votes in the end. We've seen that movie before. If the sequel plays in Washington, passing a bill will again require the votes of every single Democrat plus the two independents. With veto power thus handed to each of 60 senators, the bidding war will not be pretty.
On substance, while both health-care and financial reform are complex, health care at least benefited from broad agreement within the Democratic caucus on the core elements: expanded but not universal coverage, subsidies for low-income families, enough new revenue to pay the bills, insurance exchanges, insurance reform (e.g., no denial of coverage for pre-existing conditions), and experiments in cost containment to "bend the curve." The fiercest political fights were over peripheral issues like the public option, abortion rights (how did that ever get in there?), and whether Nebraskans should pay like other Americans (don't try to explain that one to foreigners).
But financial regulatory reform is not like that. Every major element is contentious: a new resolution authority for ailing institutions, a systemic risk regulator, a separate consumer protection agency, whether to clip the Fed's wings or broaden them, restrictions on executive compensation, regulation of derivatives, limits on proprietary trading, etc.
The elements are interrelated; you can't just pick one from column A and two from column B. What's worse, several components would benefit from international cooperation—for example, consistent regulation of derivatives across countries. This last point raises the degree of difficulty substantially. No one worried about international agreement while Congress was writing a health-care bill.
All and all, enacting sensible, comprehensive financial reform would be a tall order even if our politics were more civil and bipartisan than they are. To do so, at least a few senators—Republicans or Democrats—will have to temper their partisanship, moderate their parochial instincts, slam the door on the lobbyists, and do what is right for America. Figure the odds. Gordon Gekko already has.
Bob Jensen's threads on outrageous executive compensation are at
Italian companies—with Rome's backing—have equipped Iran's military and contributed to the regime's satellite and possibly nuclear programs. When it comes to appeasing the Islamic Republic, no other Western nation has stooped lower than Italy. Amid the international outrage over the Iranian regime's brutalization of its own people, Italian Foreign Minister Franco Frattini warned Europe "must not burn every bridge because Iran is a key figure" in the region. While rejecting any military action to stop Tehran's nuclear weapons program, Mr. Frattini urged the West to "avoid those [sanctions] that are connected with Iranian national pride.
Giulio Meotti, "The Rome-Tehran Axis: Italian companies—with Rome's backing—have equipped Iran's military and contributed to the regime's satellite and possibly nuclear programs," The Wall Street Journal, January 14, 2010 ---
"Let's Take the "Crony" Out of "Crony
Capitalism" by John Stossel, Townhall, January 13, 2010 ---
When Judge Richard Posner, the prolific conservative intellectual, released his book "A Failure of Capitalism: The Crisis of '08 and the Descent Into Depression" last year, you might have thought the final verdict was in: Capitalism caused the economic downturn and high unemployment.
That this verdict was pronounced by someone like Posner, who is associated with the University of Chicago and the free-market law and economics movement, gave moral support to all the politicians who were intent on exploiting the recession (as they exploit all crises) to increase government control of the economy.
But what exactly is this "capitalism" that is blamed?
The word "capitalism" is used in two contradictory ways. Sometimes it's used to mean the free market, or laissez faire. Other times it's used to mean today's government-guided economy. Logically, "capitalism" can't be both things. Either markets are free or government controls them. We can't have it both ways.
The truth is that we don't have a free market -- government regulation and management are pervasive -- so it's misleading to say that "capitalism" caused today's problems. The free market is innocent.
But it's fair to say that crony capitalism created the economic mess.
Crony capitalism, by the way, will be the subject of my TV show this week on the Fox Business Network (Thursday at 8 p.m. Eastern; Friday at 10).
What is crony capitalism? It's the economic system in which the marketplace is substantially shaped by a cozy relationship among government, big business and big labor. Under crony capitalism, government bestows a variety of privileges that are simply unattainable in the free market, including import restrictions, bailouts, subsidies and loan guarantees.
Crony capitalism is as old as the republic itself. Congress' first act in 1789 -- on July 4, no less! -- was a tariff on foreign goods to protect influential domestic business interests.
We don't have to look far to see how crony-dominated American capitalism is today. The politically connected tire and steel industries get government relief from a "surge" of imports from China. (Who cares if American consumers want to pay less for Chinese steel and tires?) Crony capitalism, better know as government bailouts, saved General Motors and Chrysler from extinction, with Barack Obama cronies the United Auto Workers getting preferential treatment over other creditors and generous stock holdings (especially outrageous considering that the union helped bankrupt the companies in the first place with fat pensions and wasteful work rules). Banks and insurance companies (like AIG) are bailed out because they are deemed too big to fail. Favored farmers get crop subsidies.
If free-market capitalism is a private profit-and-loss system, crony capitalism is a private-profit and public-loss system. Companies keep their profits when they succeed but use government to stick the taxpayer with the losses when they fail. Nice work if you can get it.
The role that regulation plays in crony capitalism is unappreciated. Critics of business assume that regulation is how government tames corporations. But historically, regulation has been how one set of businesses (usually bigger, well-connected ones) gains advantages over others. Timothy Carney's book about this, "The Big Ripoff: How Big Business and Big Government Steal Your Money", explains why Phillip Morris joined the "war on tobacco," General Motors pushed for clean-air legislation and Archer Daniels Midland likes ethanol subsidies.
As economist Bruce Yandle writes, "(I)ndustry support of regulation is not rare at all; indeed, it is the norm."
If you wonder why, ask yourself: Which are more likely to be hampered by vigorous regulatory standards: entrenched corporations with their overstaffed legal and accounting departments or small startups trying to get off the ground? Regulation can kill competition -- and incumbents like it that way.
When will Michael Moore figure this out? His last movie attacked what he calls capitalism, but his own work shows that it's not the free market that causes the ills he abhors. Had he called the movie "Crony Capitalism: A Love Story," he would have been on firmer ground.
It's time we acknowledged the difference between the free market, which is based on freedom and competition, and crony capitalism, which is based on privilege. Adam Smith knew the difference -- and chose the free-market.
What's taking us so long?
"The Biggest Losers Behind the
Christmas Eve taxpayer massacre at Fannie and Freddie," The Wall Street
Journal, January 3, 2009 ---
Happy New Year, readers, but before we get on with the debates of 2010, there's still some ugly 2009 business to report: To wit, the Treasury's Christmas Eve taxpayer massacre lifting the $400 billion cap on potential losses for Fannie Mae and Freddie Mac as well as the limits on what the failed companies can borrow.
The Treasury is hoping no one notices, and no wonder. Taxpayers are continuing to buy senior preferred stock in the two firms to cover their growing losses—a combined $111 billion so far. When Treasury first bailed them out in September 2008, Congress put a $200 billion limit ($100 billion each) on federal assistance. Last year, the Treasury raised the potential commitment to $400 billion. Now the limit on taxpayer exposure is, well, who knows?
The firms have made clear that they may only be able to pay the preferred dividends they owe taxpayers by borrowing still more money . . . from taxpayers. Said Fannie Mae in its most recent quarterly report: "We expect that, for the foreseeable future, the earnings of the company, if any, will not be sufficient to pay the dividends on the senior preferred stock. As a result, future dividend payments will be effectively funded from equity drawn from the Treasury."
The loss cap is being lifted because the government has directed both companies to pursue money-losing strategies by modifying mortgages to prevent foreclosures. Most of their losses are still coming from subprime and Alt-A mortgage bets made during the boom, but Fannie reported last quarter that loan modifications resulted in $7.7 billion in losses, up from $2.2 billion the previous quarter.
The government wants taxpayers to think that these are profit-seeking companies being nursed back to health, like AIG. But at least AIG is trying to make money. Fan and Fred are now designed to lose money, transferring wealth from renters and homeowners to overextended borrowers.
Even better for the political class, much of this is being done off the government books. The White House budget office still doesn't fully account for Fannie and Freddie's spending as federal outlays, though Washington controls the companies. Nor does it include as part of the national debt the $5 trillion in mortgages—half the market—that the companies either own or guarantee. The companies have become Washington's ultimate off-balance-sheet vehicles, the political equivalent of Citigroup's SIVs, that are being used to subsidize and nationalize mortgage finance.
This subterfuge also explains the Christmas Eve timing. After December 31, Team Obama would have needed the consent of Congress to raise the taxpayer exposure beyond $400 billion. By law, negative net worth at the companies forces them into "receivership," which means they have to be wound down.
Unlimited bailouts will now allow the Treasury to keep them in conservatorship, which means they can help to conserve the Democratic majority in Congress by increasing their role in housing finance. With the Federal Reserve planning to step back as early as March from buying $1.25 trillion in mortgage-backed securities, Team Obama is counting on Fan and Fred to help reflate the housing bubble.
That's why on Christmas Eve Treasury also rolled back a key requirement of the 2008 bailout—that Fan and Fred begin shrinking the portfolios of mortgages they own on their own account, which total a combined $1.5 trillion. Risk-taking will now increase, so that the government can once again follow Barney Frank's infamous advice that the companies "roll the dice" on subsidies for affordable housing.
All of which would seem to make the CEOs of Fannie and Freddie the world's most overpaid bureaucrats. A release from the Federal Housing Finance Agency that also fell in the Christmas Eve forest reports that, after presiding over a combined $24 billion in losses last quarter, Fannie CEO Michael Williams and Freddie boss Ed Haldeman are getting substantial raises. Each is now eligible for up to $6 million annually.
Freddie also has one of the world's highest-paid human resources executives. Paul George's total compensation can run up to $2.7 million. It must require a rare set of skills to spot executives capable of losing billions of dollars.
Where is Treasury's pay czar when we actually need him? You guessed it, Fannie and Freddie are exempt from the rules applied to the TARP banks. The government gave away the game that these firms are no longer in the business of making profits when it announced that the CEOs will be paid entirely in cash, though it is discouraging that practice at other big banks. Who would want stock in the Department of Housing and Urban Development?
Meanwhile, these biggest of Beltway losers continue to be missing from the debate over financial reform. The Treasury still hasn't offered its long-promised proposals even as it presses reform on banks that played a far smaller role in the financial mania and panic. Senate Banking Chairman Chris Dodd (D., Conn.) and ranking Republican Richard Shelby recently issued a joint statement on their "progress" toward financial regulatory reform, but their list of goals also doesn't mention Fannie or Freddie.
Since Mr. Shelby has long argued for reform of these government-sponsored enterprises, their absence suggests that Mr. Dodd's longtime effort to protect Fan and Fred is once again succeeding. It would be worse than a shame if, having warned about the iceberg for years, Mr. Shelby now joins Mr. Dodd in pretending that these ships aren't sinking.
In today's Washington, we suppose, it only makes sense that the companies that did the most to cause the meltdown are being kept alive to lose even more money. The politicians have used the panic as an excuse to reform everything but themselves.
The Price for Fannie and Freddie Keeps Going Up: Barney Frank's
decision to 'roll the dice' on subsidized housing is becoming an epic disaster
for taxpayers," by Peter J. Wallison,
The Wall Street Journal,
December 29, 2009 ---
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.
In 2005, the Senate Banking Committee, then controlled by Republicans, adopted tough regulatory legislation that would have established more auditing and oversight of the two agencies. But it was passed out of committee on a partisan vote, and with no Democratic support it never came to a vote.
By the end of 2008, Fannie and Freddie held or guaranteed approximately 10 million subprime and Alt-A mortgages and mortgage-backed securities (MBS)—risky loans with a total principal balance of $1.6 trillion. These are now defaulting at unprecedented rates, accounting for both their 2008 insolvency and their growing losses today. Since 2008, under government control, the two agencies have continued to buy dicey mortgages in order to stabilize housing prices.
There is more to this ugly situation. 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.
It is easy to see how this misrepresentation was a principal cause of the financial crisis.
Market observers, rating agencies and investors were unaware of the number of subprime and Alt-A mortgages infecting the financial system in late 2006 and early 2007. Of the 26 million subprime and Alt-A loans outstanding in 2008, 10 million were held or guaranteed by Fannie and Freddie, 5.2 million by other government agencies, and 1.4 million were on the books of the four largest U.S. banks.
In addition, about 7.7 million subprime and Alt-A housing loans were in mortgage pools supporting MBS issued by Wall Street banks—which had long before been driven out of the prime market by Fannie and Freddie's government-backed, low-cost funding. The vast majority of these MBS were rated AAA, because the rating agencies' models assumed that the losses that are incurred by subprime and Alt-A loans would be within the historical range for the number of high-risk loans known to be outstanding.
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.
The first major victim was Bear Stearns, the smallest of the five major Wall Street investment banks but one invested heavily in risky MBS. The government rescue of Bear Stearns in March 2008 signaled that the U.S. government, and perhaps others, would stand behind other large financial institutions. The moral hazard this engendered was deadly when Lehman Brothers' solvency came under challenge. Spreads in the credit default swap market for Lehman, despite massive short-selling, showed very little alarm by investors until just before the fateful weekend of Sept. 13 and 14, when they blew out on fears that the firm might not be rescued.
By that time it was too late for Lehman's counterparties to take the protective action that might have cushioned the shock. As it turned out, however, none of Lehman's largest counterparties failed—so much for the idea that the financial market is "interconnected"—but all market participants now realized they had to know the true financial condition of their counterparties. The result was a freeze-up in interbank lending.
For most people, that freeze-up is the beginning of the financial crisis. But its roots go back to 1993, when Fannie and Freddie began stocking up on subprime and other risky loans while reporting them as prime.
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. With the Federal Housing Administration, Wall Street investment banks, and Fannie and Freddie all competing for these loans, the bottom of the barrel had long before been scraped and the financial system set up for a crisis.
Bob Jensen's threads on Barney's Rubble
"The Tom DeLay Democrats So much for the President's pledge of C-Span transparency," The Wall Street Journal, January 6, 2010 ---
Rehabilitating Tom DeLay's reputation always seemed hopeless, or so we thought—but then again, President Obama ran on hope. Against the odds Democrats are making the former GOP Majority Leader look better by comparison as they bypass the ordinary institutions of deliberative democracy in the final sprint to pass ObamaCare.
Instead of appointing a formal conference committee to reconcile the House and Senate health bills, a handful of Democratic leaders will now negotiate in secret by themselves. Later this month, presumably white smoke will rise from the Capitol Dome, and then Nancy Pelosi, Harry Reid and the college of Democratic cardinals will unveil their miracle. The new bill will then be rushed through both chambers with little public scrutiny or even the chance for the Members to understand what they're passing.
Evading conference has become standard operating procedure in this Congress, though you might think they'd allow for the more open and thoughtful process on what Mr. Obama has called "the most important piece of social legislation since the Social Security Act passed in the 1930s and the most important reform of our health-care system since Medicare passed in the 1960s."
This black-ops mission ought to be a particular embarrassment for Mr. Obama, given that he campaigned on transparent government. At a January 2008 debate he said that a health-care overhaul would not be negotiated "behind closed doors, but bringing all parties together, and broadcasting those negotiations on C-Span so the American people can see what the choices are."
The C-Span pledge became a signature of his political pitch. During a riff at the San Francisco Chronicle about "accountability," he added that "I would not underestimate the degree to which shame is a healthy emotion and that you can shame Congress into doing the right thing if people know what's going on."
Apparently this Congress knows no shame. In a recent letter to Congressional leaders, C-Span president Brian Lamb committed his network to airing "all important negotiations," which if allowed would give "the public full access, through television, to legislation that will affect the lives of every single American." No word yet from the White House.
At a press conference in December, even Mrs. Pelosi said that "we would like to see a full conference." One reason she mentioned was that "there is a great deal of work involved in reviewing a bill and seeing what all the ramifications are of it," though her real motive at the time was that a conference seemed like a chance to drag the bill closer to the House version.
With public support collapsing, however, Democrats now think the right bill is any bill—and soon. Democrats know that a conference forces the majority party to cast votes on awkward motions and would give the Republicans who have been shut out for months a chance to participate. This sunlight, and the resulting public attention, might scare off wavering Democrats and defeat the bill. Ethics rules the Democrats passed in 2007 also make it harder to "airdrop" into conference reports the extra bribes they will no doubt add to grease the way for final passage.
Democrats howled at the strong-arm tactics Mr. DeLay used to pass Medicare drug coverage in 2003, and so did we. But they've managed to create an even more destructive bill, and their tactics are that much worse. We can't even begin to imagine the uproar if the Republicans had tried to privatize Social Security with such contempt for the democratic process and public opinion.
Bob Jensen's threads on health care reform
The reason is simple: the State Department insists
that “possible” and even “suspected” terrorists deserve visas. Denials and
revocations are reserved only for known terrorists. Whether or not “dots” had
been “connected,” Abdulmutallab never could have come as close as he did to
successful mass murder had the State Department immediately revoked his visa
when his father warned U.S. officials about his son’s terrorist ties. Without a
valid visa, the young Nigerian would not have been en route to the U.S. in the
Joel Mowbray, "State Department Sides With “Suspected” Terrorists Seeking Visas to U.S.," Townhall, January 11, 2010 ---
"How to Guard Against Stimulus Fraud: Based on past experience,
thieves may rip off the taxpayers for $100 billion," by Daniel J. Castleman,
The Wall Street Journal, January 13, 2010 ---
The Obama administration—and state and local governments—should brace themselves for fraud on an Olympic scale as hundreds of billions of taxpayer dollars continue to pour into job creation efforts.
Where there are government handouts, fraud, waste and abuse are rarely far behind. The sheer scale of the first and expected second stimulus packages combined with the multitiered distribution channel—from Washington to the states to community agencies to contractors and finally to workers—are simply irresistible catnip to con men and thieves.
There are already warning signs. The Department of Energy's inspector general said in a report in December that staffing shortages and other internal weaknesses all but guarantee that at least some of the agency's $37 billion economic-stimulus funds will be misused. A tenfold increase in funding for an obscure federal program that installs insulation in homes has state attorneys general quietly admitting there is little hope of keeping track of the money.
While I was in charge of investigations at the Manhattan District Attorney's office, we brought case after case where kickbacks, bid-rigging, false invoicing schemes and outright theft routinely amounted to a tenth of the contract value. This was true in industries as diverse as the maintenance of luxury co-ops and condos, interior construction and renovation of office buildings, court construction projects, dormitory construction projects, even the distribution of copy paper. In one insurance fraud case, the schemers actually referred to themselves as the "Ten Percenters."
Based on past experience, the cost of fraud involving federal government stimulus outlays of more than $850 billion and climbing could easily reach $100 billion. Who will prevent this? Probably no one, particularly at the state and local level.
New York, for instance, has an aggressive inspector general's office, with experienced and dedicated professionals. But, it is already woefully understaffed—with a head count of only 62 people—to police the state's already existing agencies and programs. There is simply no way that office can effectively scrutinize the influx of $31 billion in state stimulus money.
There is a solution however, which is to set aside a small percentage of the money distributed to fund fraud prevention and detection programs. This will ensure that states and municipalities can protect projects from fraud without tapping already thinly stretched resources.
Meaningful fraud prevention, detection and investigation can be funded by setting aside no more than 2% of the stimulus money received. For example, if a county is to receive $50 million for an infrastructure project, $1 million should be set aside to fund antifraud efforts; if it costs less, the remainder can be returned to the project's budget.
While the most obvious option might be to simply pump the fraud prevention funds into pre-existing law enforcement agencies, that would be a mistake. Government agencies take too long to staff up and rarely staff down.
A better idea is to tap the former government prosecutors, regulators and detectives with experience in fraud investigations now working in the private sector. If these resources can be harnessed, effective watchdog programs can be put in place in a timely manner. Competition between private-sector bidders will also lower the cost.
Some might object to providing a "windfall" to private companies. Any such concern is misplaced. One should not look at the 2% spent, but rather the 8% potentially saved. Moreover, consider the alternative: law enforcement agencies swamped trying to stem the tide of corruption on a shoestring and a prayer.
There will always be individuals who will rip off money meant for public projects. In the aftermath of the 9/11 attacks, and Hurricane Katrina hundreds of people were prosecuted for trying to steal relief funds. But the stimulus funding represents the kind of payday even the most ambitious fraudster could never have imagined
To avoid a stimulus fraud Olympics that will be impossible to clean up, it is better to spend a little now to save a lot later. The savings could put honest people to work and fraudsters out of business.
Mr. Castleman, a former chief assistant Manhattan district attorney, is a managing director at FTI Consulting.
Bob Jensen's Fraud Updates
Jensen's threads on The Sad State of Governmental Accounting and Accountability
Criminal Class is Writing the Laws ---
"Who Is Wesley Mouch?" by John
Stossel, Townhall, January 6, 2010 ---
Tomorrow, my Fox Business Network show about Ayn Rand's novel "Atlas Shrugged" will finally air. That should stop the emails like this one from Karen Cooper:
"Oh for the love of god! 'Atlas Shrugged' explains about 99 percent of what's wrong in all of the arenas of topics: health care, education, climate change, unions, the economy, etc. PLEASE PLEASE PLEASE cover 'Atlas.'"
Cooper makes a good point. Even though Rand published "Atlas" in 1957, her descriptions of intrusive and bloated government read like today's news. The "Preservation of Livelihood Law" and "Equalization of Opportunity Law" could be Nancy Pelosi's or Harry Reid's work.
The novel's chief villain is Wesley Mouch, a bureaucrat who cripples the economy with endless regulations. This sounds familiar. Reason magazine reports that "as he looks around Washington these days," Rep. Paul Ryan "can't help but think he's seeing a lot of Wesley Mouch".
Me, too. I also saw a lot of him under George W. Bush.
So I'm conducting this unscientific poll: Who is our Wesley Mouch? Hank Paulson? Tim Geithner? Barney Frank? You can vote here.
Personally, I think Chris Dodd's ridiculous financial proposals ought to win him the honor. But he isn't among the choices on Fox's list. As I write this, Geithner, President Obama and Barney Frank lead the voting.
My first guest on the show (FBN, 8 p.m. Eastern Thursday, repeating at 10 p.m. Friday) is BB&T Chairman and "Atlas" fan John Allison. Allison's bank, the ninth largest in America, is doing very well, but he's angry the government forced him to take TARP money (http://tinyurl.com/lguje9).
Allison once told The New York Times, "To say man is bad because he is selfish is to say it's bad because he's alive."
I'll pack the audience with some "Atlas" haters. That shouldn't be hard. My daughter's boyfriend offers up his Yale classmates. Many "liberals" agree with the "South Park" episode in which one character said that "because of this piece of s--t, I am never reading again." Rand brings out ferocious hatred in some people.
Also, I'll get a fish pedicure. Really.
This is a dubious Turkish idea that's become popular in Asia and is now trying for a foothold (pun intended) here. Instead of scraping dead skin off their feet, people have little garra rufa fish gently chew on them.
Fourteen states have banned fish pedicures, claiming they are unsafe, and other local governments have proposed bans. OK, compared to the assault on entrepreneurship described in "Atlas Shrugged," this is sort of a dumb example, but look -- I work in television -- dumb examples can make good points.
The bureaucrats say the fish can't be sterilized without killing them. They say customers will get infections. People could die! It's not safe! And it's cruel to the fish!
Has anyone died? Can you refer me to someone who got an infection? Anyone? The bureaucrats' answer is always no. But it's better to be cautious, they say.
In fact, the free market sorts such things out far more efficiently than bureaucrats. It's just not good business to hurt your customers. My 30 years of consumer reporting taught me that businesses rarely do this, and -- here's the market's self-regulation -- those that do don't stay in business long. That's not a perfect system, but it's much better than central planning. Had today's bureaucrats been in charge decades ago, they would have banned things like aspirin, cars and airplanes.
Sadly, they are in charge now. That makes the "Atlas" message important today.
Although Rand idolizes businessman in the abstract, "Atlas Shrugged" makes clear that she (like Adam Smith) understood that they are not natural friends of free markets. They are often first in line for privileges bestowed by the state. That's called "crony capitalism," and that's what Orren Boyle practices in "Atlas." After my "Atlas Shrugged" show, I plan a show on that subject. Suggestions invited.
I don't want to be controlled by business any more than I want to be regulated by Nancy Pelosi or Wesley Mouch.
I want the freedom to make my own choices.
Although John Stossel is one of my heroes, I find it a bit inconsistent that in the above piece he rants against regulation when over the years as a strong consumer advocate the "Give Us a Break" Stossel supported regulations that help protect consumers against the exploitations of big business.
Bob Jensen's universal health care messaging --- http://www.trinity.edu/rjensen/Health.htm
the Tidbits Archives ---
Bob Jensen's economic crisis messaging http://www.trinity.edu/rjensen/2008Bailout.htm
Bob Jensen's threads --- http://www.trinity.edu/rjensen/threads.htm
Bob Jensen's Home Page --- http://www.trinity.edu/rjensen/