Now for Something Totally Different

July 31, 2008

It is not my custom to quote the fella who put the you-know-what in Dick Nixon, even if he does tie a mean, Reagan-worthy double-Windsor.

However, courtesy of my friend Ted Whatley, this is worth a read:



Thanks for the Obvious, Mr. Boskin

July 31, 2008


A dear friend asked about my reaction to Michael Boskin’s piece in the WSJ today.:

 He–my friend, not Mr. Boskin–is obviously at the beach without sufficient distraction, otherwise he wouldn’t give a rip what I thought.

But here’s my reply to his email:

Ok, so here’s my read.

First, anybody at Hoover is just so concerned about irrelevance that they’ll say almost anything to get published.

Second, neither of these candidates has articulated  an economic plan that works (not to promote my blog, but the two  Fallows pieces I posted yesterday are really good reading).  We have a  $14 trillion debt and will hang another half trillion on that next year, plus interest paid to the chinese, japanese, russians, and various emirates, none of whom especially likes us.  To me, that is issue #1 that nobody is talking about, just like nuclear proliferation is #1 in foreign policy.  The reason nobody talks about either is that the problems are so hard to solve.  Pete Peterson is on the right track with iousa, but his implementation seems a little out there.

I know Boskin didn’t write the headline, but “recipe for recession” is an impossibly small-bore rx to a bigger problem.  It’s like saying “my breakfast was really expensive at the Dorchester” when the real problem is the perilous state of the dollar.

Say of the Day: Bertrand Russell in Conquest of Happiness

July 30, 2008

Wars, pogroms and persecutions have all been a part of the flight from boredom; even quarrels with neighbors have been found better than nothing.   Boredom is therefore a vital problem fot the moralist, as half the sins of mankind are caused by fear of it.

Is That So Much To Ask?

July 29, 2008

I just ripped open my Amazon shipment (leaping landfills, Batman–the packaging waste!) of Michael Dobbs’ One Minute to Midnight, about the Cuban missile crisis.  I opened the book randomly, and this phrase caught my eye:

“As was often the case, Kennedy was one step ahead of his aides.”

Mercy.  Wouldn’t that be something?

James Fallows on Our Dicey Chinese Bargain

July 29, 2008

As the title of the blog indicates, I’m not the best sleeper.  And James Fallows has cost me about as much sleep as anybody else I can think of.  His clever memo of economic disaster to the President taking office in 2016 was three years ago:

And now, a Tinker-Evers-Chance explication of why our $1 billion per day borrowing habit from China may prove our undoing:

China has grown at 9% per year for the last 30 years and still enforces a roughly 50% savings rate on its people (vs. about 25% in India).  The U.S. savings rate is zero to slightly negative, and hasn’t been above 10% in two generations.  Chinese, Japanese, Russian and Middle Eastern investors have had negative returns on their supposedly uber-safe U.S. Treasury investments, adjusted for inflation and dollar depreciation for the last four years.  The U.S. is $9.3 trillion or so in debt, and will run a $.5 trillion deficit next year.  

Other than that everything is dandy. 

Our nation is officially in the grip of the logic of the alcoholic:  since I’m already hammered, what harm is one more drink?  What’s needed is a national 12-step program that our political institutions are not set up to provide.  This sets up as the most daunting leadership challenge since Churchill faced in WWII.  The scariest part is that it’s a challenge which can probably be ducked entirely–for another Presidential term or maybe even five.

More on the Elusive FHFA

July 27, 2008

I don’t know Jim Hamilton, but I thank him for reading HR3321, also known as the Housing and Economic Recovery Act,  and summarizing it here:

One fascinating tidbit which hasn’t gotten much play in the media:

As part of the enhanced oversight, the new regulator must specifically approve, disapprove or modify executive compensation at all of the GSEs. A regulated entity may be required to withhold compensation from an executive officer during a review of the reasonableness and comparability of compensation, and may take into consideration any wrongdoing by the officer.

Additionally, the director of the agency is appointed by the President.  The current ofheo director is the interim director.  It would send a great signal if the President would pick somebody with real lumber rather than expand the powers of a guy who seems like a career bureaucrat.

In any case, all the rearranging of regulatory deck chairs only shines a brighter light on how much of a kluge FM2 have become.   I can’t think of another entity anywhere in the world which is subject to exchange, GAAP and Sarbox rules; is supposedly owned by shareholders who supposedly elect a board of directors; but has their executive comp lorded over by a Presidential appointee who in turn reports to his own board, which includes not one but two Cabinet secretaries (HUD and Treasury).

If good decisions actually get made amidst this Rube Goldberg set up, they will likely be accidental.

Oh, and another thing.  I haven’t read a peep that perhaps its time to throw the whole lot out–management, boards and regulators.  Why on God’s earth would we leave in their seats the same blokes who got us here to begin with?

Bleak Math at the NY Times

July 27, 2008