Posts Tagged ‘economics’

What is “alt-Right” in this year’s election ?

Sunday, August 28th, 2016

There is a new theme for the Democrats in this year’s election. Hillary calls it the “Alt-Right.”

The New York Times is alarmed.

As Hillary Clinton assailed Donald J. Trump on Thursday for fanning the flames of racism embraced by the “alt-right,” the community of activists that tends to lurk anonymously in the internet’s dark corners could hardly contain its glee.

Mrs. Clinton’s speech was intended to link Mr. Trump to a fringe ideology of conspiracies and hate, but for the leaders of the alt-right, the attention from the Democratic presidential nominee was a moment in the political spotlight that offered a new level of credibility. It also provided a valuable opportunity for fund-raising and recruiting.

Jared Taylor, editor of the white nationalist publication American Renaissance, live-tweeted Mrs. Clinton’s remarks, questioning her praise of establishment Republicans and eagerly anticipating her discussion of his community.

According to Hillary and the Times, Donald Trump is defined by those who say they support him more than by what he says himself.

If Hillary and Bernie Sanders are supported by communists, does that make them communists ? This is an odd year and will get worse.

A better explanation of “alt-Right” is provided by two spokesmen for another view.

A specter is haunting the dinner parties, fundraisers and think-tanks of the Establishment: the specter of the “alternative right.” Young, creative and eager to commit secular heresies, they have become public enemy number one to beltway conservatives — more hated, even, than Democrats or loopy progressives.
The alternative right, more commonly known as the alt-right, is an amorphous movement. Some — mostly Establishment types — insist it’s little more than a vehicle for the worst dregs of human society: anti-Semites, white supremacists, and other members of the Stormfront set. They’re wrong.

I wasn’t even aware of this controversy until Ann Althouse put up a post on the subject after Hillary raised it.

She quotes a man who was ejected from the Hillary speech.

“I call myself alt right because the conservative establishment right in this country does not represent my views, they are just as much to blame for the disaster taking place in America as the left, the alt right to me is fiscal responsibility, secure borders, enforcement of immigration laws, ending the PC culture, and promoting AMERICA FIRST (Not Sharia First)… If you come to this country legally, follow the laws, learn our language, and love the country, you are equal, no matter your color, or religion. Basically alt-right is to separate ourselves from the failing establishment right.

That post led to over 300 comments on her blog. She then posted a survey. The results were interesting.

alt-right poll

I voted for the choice “I’m most of all of what it stands for but I don’t use that term, myself.”

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What are George Soros motives?

Tuesday, August 23rd, 2016

George Soros is a Hungarian born billionaire who seems to be funding a lot of malicious mischief around the world. Why ?

Soros was born in Hungary in 1930.

That Wiki article is very favorable to Soros and does not mention a few things.

There is considerable discussion of Soros’ role under the Nazis.

It has been alleged that he was a collaborator. Apparently, he did admit doing some things that could be criticized although the role of a 14 year old is pretty weak.

It was a tremendous threat of evil. I mean, it was a — a very personal experience of evil.

KROFT: My understanding is that you went out with this [Christian] protector of yours who swore that you were his adopted godson.

Mr. SOROS: Yes. Yes.

KROFT: Went out, in fact, and helped in the confiscation of property from the Jews.

Mr. SOROS: Yes. That’s right. Yes.

KROFT: I mean, that’s — that sounds like an experience that would send lots of people to the psychiatric couch for many, many years. Was it difficult?

Mr. SOROS: Not — not at all. Not at all. Maybe as a child you don’t — you don’t see the connection. But it was — it created no — no problem at all.

KROFT: No feeling of guilt?

Mr. SOROS: No.

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What happened to Venezuela?

Saturday, May 21st, 2016

venzuela

Venezuela is in the news as the country cannot even buy paper to print money.

This all goes back to 1998 when Chavez was elected by the people.

He was an army officer and had previously attempted to overthrow the government, a coup that failed.

in the early 1980s. Chávez led the MBR-200 in an unsuccessful coup d’état against the Democratic Action government of President Carlos Andrés Pérez in 1992, for which he was imprisoned. Released from prison after two years, he founded a political party known as the Fifth Republic Movement and was elected president of Venezuela in 1998.

Venezuela is an example of The Curse of Natural Resources.

The idea that resources might be more of an economic curse than a blessing began to emerge in debates in the 1950s and 1960s about the economic problems of low and middle-income countries.[3] The term resource curse was first used by Richard Auty in 1993 to describe how countries rich in mineral resources were unable to use that wealth to boost their economies and how, counter-intuitively, these countries had lower economic growth than countries without an abundance of natural resources. An influential study by Jeffrey Sachs and Andrew Warner found a strong correlation between natural resource abundance and poor economic growth.

Venezuela is only the latest and worst example. The history is depressingly familiar.

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Government: the things we do together.

Wednesday, April 6th, 2016

cal

Barack Obama is fond of describing government this way.

As President Obama said the other day, those who start businesses succeed because of their individual initiative – their drive, hard work, and creativity. But there are critical actions we must take to support businesses and encourage new ones – that means we need the best infrastructure, a good education system, and affordable, domestic sources of clean energy. Those are investments we make not as individuals, but as Americans, and our nation benefits from them.

That was a reaction to Romney’s criticism of his silly comment.

I prefer the quote attributed to Washington.

“Government is not reason, it is not eloquence,—it is force! Like fire, it is a dangerous servant, and a fearful master; never for a moment should it be left to irresponsible action.”

Now, we see a new imposition.

The Department of Labor says its so-called fiduciary rule will make financial advisers act in the best interests of clients. What Labor doesn’t say is that the rule carries such enormous potential legal liability and demands such a high standard of care that many advisers will shun non-affluent accounts. Middle-income investors may be forced to look elsewhere for financial advice even as Team Obama is enabling a raft of new government-run competitors for retirement savings. This is no coincidence.

Labor’s new rule will start biting in January as the President is leaving office. Under the rule, financial firms advising workers moving money out of company 401(k) plans into Individual Retirement Accounts will have to follow the new higher standards. But Labor has already proposed waivers from the federal Erisa law so new state-run retirement plans don’t have the same regulatory burden as private employers do.

State run retirement plans. What could go wrong ? Well, we saw one version in Cyprus in 2013.

European leaders reached an agreement with Cyprus early on Monday morning that closes down the island’s second-largest bank and inflicts huge losses on wealthy savers.

Those with deposits of less than €100,000 (£85,000) will be spared, but those with more than €100,000 – many of them Russian – will lose billions of euros under draconian terms aimed at preventing the Mediterranean tax haven becoming the first country forced out of the single currency.

The deal is expected to wreak lasting damage on the Cypriot economy, which has grown reliant on offshore banking and Russian money. Analysts said Cyprus could see its economy contract by 10% or more in the years ahead.

Well, those Russian oligarchs deserved it. Maybe American companies attempting “inversion” deserve it too.

CEOs have learned to keep mum in the Obama era, lest their companies be punished like J.P. Morgan after Jamie Dimon criticized some parts of Dodd-Frank. So it’s worth noting the candid reaction after a new Treasury rule scuttled the merger between Pfizer Inc. and Allergan PLC.

The companies ended their $150 billion tie-up after Treasury Secretary Jack Lew issued new rules that made it harder for companies like Pfizer to move to Ireland to legally lower their taxes. Pfizer will have to pay Allergan a breakup fee of $150 million, though Allergan shares are still down more than $10 billion since the Treasury ambush.

I am not a slavish advocate of corporate tax avoidance but we are in an era of confiscation.

“If the rules can be changed arbitrarily and applied retroactively, how can any U.S. company engage in the long-term investment planning necessary to compete,” Mr. Read writes. “The new ‘rules’ show that there are no set rules. Political dogma is the only rule.”

He’s right, as every CEO we know will admit privately. This politicization has spread across most of the economy during the Obama years, as regulators rewrite longstanding interpretations of longstanding laws in order to achieve the policy goals they can’t or won’t negotiate with Congress. Telecoms, consumer finance, for-profit education, carbon energy, auto lending, auto-fuel economy, truck emissions, home mortgages, health care and so much more.

Now, they want everypne to “invest” in state run “retirement programs.” CalPERS has not distinguished itself, except perhaps in corruption.

After spending years dogged by unpaid debts, California labor leader Charles Valdes filed for bankruptcy in the 1990s—twice. At the same time, he held one of the most influential positions in the American financial system: chair of the investment committee for the California Public Employees’ Retirement System, or CalPERS, the nation’s largest pension fund for government workers. Valdes left the board in 2010 and now faces scrutiny for accepting gifts from another former board member, Alfred Villalobos—who, the state alleges, spent tens of thousands of dollars trying to influence how the fund invested its assets. Questioned by investigators about his dealings with Villalobos, Valdes invoked the Fifth Amendment 126 times.

Well, it is California where Hispanics, especially illegals, run the state.

Last month the board of California’s new “Secure Choice” retirement plan wrote to state legislators about their “exciting win” in Washington. They reported that employers enrolling workers in the new government-run plan “would have no liability or fiduciary duty for the plan.” Score! The California bureaucrats added that “we have been given the green light to auto-enroll workers into an Individual Retirement Account (IRA).”

What could go wrong ?

More on where Trump came from.

Monday, March 7th, 2016

There is increasing panic among the GOPe about the possibility that Trump could win the nomination. The “Anyone But Trump” fixation is obsessing the usual suspects.

Megan McArdle: As I see it, there are basically three strategies you can follow:

Anyone but Trump: It doesn’t matter, as long as you vote against Trump. Democrats in open primary states can play, too.
Vote the leader: Pick the winner in your state, and force the nomination selection to the convention.
Attempt to generate an actual alternative front-runner by voting for the national poll leader, or the most plausible candidate — probably Marco Rubio, given that he seems to have the most support from the highest number of GOP coalitions, but possibly Ted Cruz, since he appears to be the next most appealing to Trump voters.
I’ll just start by asking: Which of these would someone follow if their main priority is to defeat Trump? Or am I thinking about it all wrong?

Sean Trende: No, I think you have it basically right. I actually think that, for now, their best chance lies behind Door No. 2.

Why are the elites so obsessed with keeping Trump away from the levers of power ? This is not limited to the USA. Germany is having its own voter revolt.

The anti-immigrant AFD – Alternative for Germany – party has scored massive gains in municipal weekend elections which reflect growing public anger at the refugee policies of Chancellor Angela Merkel.
The polls for councils in the state of Hesse saw the AFD make significant inroads on the two main established parties – Merkel’s conservative CDU and the centre-left SPD – to come in third with 13.2 percent of the vote, knocking the environmental Greens into fourth place.
Frankfurt CDU politician Markus Frank said: ‘The preliminary result of the AfD is frightening. I had expected a maximum five percent.’

Where does this voter anger come from ?

Maybe it is one manifestation of the Principle Agent Problem.

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The Transformation of Economics.

Tuesday, March 1st, 2016

A great piece in the Wall Street Journal today about what has happened to Economics and Economics education.

I took an Economics class in college in 1957 and it changed me to a Republican. My first vote was for Richard Nixon in 1960. My family was furious as they thought we were related to the Boston Kennedys and they had always been Democrats. I wonder if an Economics class would have that effect today?

And that political economy and my assessment of it has changed over a career spanning more than half a century. Here are five developments I would emphasize:

I agree with his appraisal.

1.• Diminishing returns to research. A core economic principle is the Law of Diminishing Returns. If you add more resources, such as labor, to fixed quantities of another resource, such as land, output eventually rises by smaller and smaller amounts. That applies—with a vengeance—to academic research. Teaching loads have fallen dramatically (although the Education Department, which probably can tell you how many Hispanic female anthropologists there are teaching in Arkansas, does not publish regular teaching-load statistics), ostensibly to allow more research. But the 50th paper on a topic seldom adds as much understanding as the first or second.

This has been characteristic of Medicine, as well as other academic subjects.

Emory University’s Mark Bauerlein once showed that scholarly papers on Shakespeare averaged about 1,000 a year—three a day. Who reads them? How much does a typical paper add at the margin to the insights that Shakespeare gave us 400 years ago?

That isn’t he has shown.

The attitude touches the President’s favorite pastime. Tevi Troy reported in Commentary how much Obama enjoys television, particularly SportsCenter and the middlebrow series Homeland and Mad Men. The New York Times added Breaking Bad and The Wire in its article “Obama’s TV Picks: Anything Edgy, with Hints of Reality,” and while it warned of the foolishness of “psychoanalyzing” a president based on “the books he reads or the music he listens to or the television shows he watches,” the story mentions not a single book. One would expect Marxists, feminists, queer theorists, post-colonialists, anti-imperialists, and media theorists to chide Obama for his bourgeois, masculinist taste, but as far as I know they have remained silent.

Obama’s taste runs more to sports and rap music.

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Trump and China

Monday, February 15th, 2016

sse-stock

Trump has, famously, gone after China on its trade policy.

In January 2000, President Bill Clinton boldly promised China’s inclusion in the World Trade Organization (WTO) “is a good deal for America. Our products will gain better access to China’s market, and every sector from agriculture, to telecommunications, to automobiles. But China gains no new market access to the United States.” None of what President Clinton promised came true. Since China joined the WTO, Americans have witnessed the closure of more than 50,000 factories and the loss of tens of millions of jobs. It was not a good deal for America then and it’s a bad deal now. It is a typical example of how politicians in Washington have failed our country.

There is an interesting analysis of China’s stumbling economy in the Observer today.

Here is a top ten guide for the perplexed.

Central Planning: Central planning, central planning. The history of the abject failure the Soviet Union’s five-year plans should tell you everything. Command and control economies that report to one man (in a nation of 1.3 billion people) are doomed from the start. Top down economic decisions often look bold and start out highly stimulative, but then degenerate into inefficiency, waste, politics and fraud.

Political Corruption: As the command and control economy generates liquidity, the demand and direction of the distributed capital becomes a political tussle. Decisions on how much steel, cement, coal, glass solar panels, high speed trains and shopping malls—in short everything—are not done in China as a cost benefit analysis by risk capital, a job difficult enough in itself. (Witness the capitalist economies’ booms and busts.) In China, this liquidity was allocated by political muscle, massive bribery and kickbacks, rather than economic justifications.

Basic Gangsterism: Counterfeiting, knockoffs, copyright infringement, theft of intellectual property – these were a part of the booster rockets of China’s economic rise. It was all supposed to go away after China joined the WTO in 2001. It didn’t. It just became more institutionalized. Foreign companies needed Chinese “partners” in auto production, healthcare and technology. These “partners” crippled the potential productivity of the investments and led to frequent disputes and even more corruption… as in the GlaxoSmithKline scandals.

There are a total of nine reasons, many addressed in Trump’s piece above.

Now, the economy of China may be in free fall.

Chinese central bank governor Zhou Xiaochuan has accused “speculative forces” of targeting the country’s currency, the yuan.
He said there was no reason for the yuan to keep depreciating in value and that China would not let international speculators dominate market sentiment.

Mr Zhou’s remarks come as Chinese markets prepare to reopen on Monday after a week-long New Year holiday.
Efforts to defend the yuan have eroded China’s foreign currency reserves.

Another reason quoted by the Observer is something I have previously posted on.

Jack Lew, speaking at the Brookings Institution in July, confidently assured that Americans were immune from weakening markets in China.

“I will say that China’s markets still are pretty much separated from world markets,” the secretary of Treasury, said. “They’re, obviously, moving towards being more integrated, but right now they’re not.”

I guess that statement is “inoperative” right now.

What actually happened is that China’s stock market began as a Potemkin project to assure the world of Beijing’s strength. Chinese investors knew the government would be propping up a mere facade; that the worse China’s economy got, the more the Communist Party would paint the facade. Harlan writes:

Let’s take a moment to state clearly that the stock market and the “real economy,” particularly in China, don’t always dance together. Until 2013, China’s major indexes were among the poorest-performing — which made almost as little sense as what happened next.

China is not a “transparent economy.”

Reckless Gamblers: How did China’s debt-to-GDP ratio go to 240% from 160% in nine years? How are nonperforming bank loans (if honestly tallied) hovering around 20 percent? There is a recklessness in early stage wealth. It happened in England in the 18th century as exemplified by the South Sea’s fraud and a hundred frauds like it. The recent Sino-Soviet forest stock fraud is an exact mirror. Rapid wealth produces intoxicated investors prone to scams. Remember how the Earl of Grantham in Downton Abby invested a fortune in a fraudulent American railroad. I wonder if there is a Chinese translation of Trollope’s “The Way We Live Now”?

China has a small very rich segment of their people who are giddy with riches. They have been foolish with their investments.

China became a binge investor in absurd countries and silly projects. As if to poke the U.S (its largest single-country trading partner) in the eye, China sidled up to Venezuela of all places. Instead of buying oil on the open market, they went deep into infrastructure projects, loans and even endorsed the psychotic foreign policy rantings of Hugo Chavez. No rational government, unless intoxicated by its economic prowess, would do that. The China Syndrome was also applied to Sudan, Zambia, Angola and Nigeria. Look at the bankrupt failed resort in the Bahamas, Baha Mar, if you want to see what “binge capital” looks like.

Trump may be correct but it may not matter.

Another update on the NHS, Bernie’s favorite health plan.

Friday, February 12th, 2016

NHS

I have mentioned problems with the NHS here before.

That was about emergency care.

Last fall there was a concern about junior doctors emigrating to other countries.

Britain is already suffering from a serious, and unprecedented, shortage of GPs, on a scale that doctors’ leaders say is fast becoming a crisis.

According to figures released last week, a staggering 10.2 per cent of full-time GP positions across the UK are currently vacant, a figure that has quadrupled in the past three years.

Two-thirds of practices are now finding it ‘difficult’ or ‘very difficult’ to find locums — freelance medics — to cover the shortfall.
As our population gets steadily older, and sicker, frontline surgeries are becoming increasingly swamped.
‘We are in dire straits if we do not act to address the GP recruitment crisis immediately,’ the Royal College of GPs warned last week.

In standard government medicine fashion, the British Health Minister imposed a new employment contract that ignored doctors complaints.

The result ?

Junior doctors are threatening a mass exodus to Australia after Jeremy Hunt forced through his controversial new contract yesterday.
There has been a huge surge in the numbers seeking certificates to practise abroad and some have already lined up jobs.
Almost 760 doctors were issued with documents by the General Medical Council in the first four weeks of this year – nearly 200 a week and almost double the usual number. Although they include some older GPs and consultants, the vast majority were disillusioned younger doctors.

Becoming a doctor is a classic middle class occupational choice. Few doctors become rich and almost none do so from actual practice. There was a phase in the 1960s when doctors suddenly became much more prosperous as Medicare was introduced, providing payment for care that had been done for no charge mostly. With time, the US government has reduced compensation and imposed rules designed to reduce costs. With the imposition of Obamacare, many older doctors who do not have heavy student loan balances and whose own children are educated, are choosing to drop all insurance, including Medicare, and practice for cash.

Obamacare has resulted in many hospitals consolidating and buying up medical practices to develop a vertically integrated system of health care delivery that resembles old industrial models. The result for physicians is a trend to salary jobs and dissatisfaction with their careers.

I met a woman geriatrician, the only fellowship trained geriatric specialist in central Iowa. She had quit Medicare. That sounds a bit suicidal if all your patients are Medicare age. What had happened was she was being harassed by Medicare because she was seeing patients too often. Many of them were frail elderly living at home. She dropped out and began charging her patients cash for services. She was making a decent living after a year and was happy with her decision. I don’t know how many realize that geriatrics, as a specialty, is a university subsidized field. There is no private geriatric practice because the doctor can’t survive on what Medicare pays. She tried and had to quit. She is doing it on her own now.

That was about Medicare. The same is happening with Obamacare and the medical conglomerates that have been assembled in anticipation of the “Industrial Model” of medical care. How is that working out in Britain ?

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The Coming Financial Armageddon.

Thursday, January 7th, 2016

An interesting piece in New York magazine describes the opinions of the man who wrote the book, The Big Short.

He is not optimistic.

Dodd-Frank really worked, and they kind of disagreed with the end of the movie, which implies that this is all going to happen again.
It sort of worked. One thing it has not changed is the sheer size of these institutions, they’ve gotten bigger rather than smaller. And I don’t understand that , I would have thought that from Too Big To Fail we would have found a way to make them small enough so that it was ok for them to fail. And know there’s all this complicated language about how you can resolve them in bankruptcy but I don’t believe it, and the markets don’t believe it. The bigger thing is — I regarded this crisis at bottom as a problem of incentives. People behaved badly because they were incentivized to behave badly, and the incentives haven’t really changed that much.

No, they haven’t and ZIRP is one reason. ZIRP is “Zero Interest Rate Program.”

I think they should have broken up the banks.

And in your opinion, why didn’t that happen?
It didn’t happen because the Obama administration decided that it was worse than the course of action they took. They considered it, kind of. If you asked Tim Geithner why it didn’t happen, he would say how am I going to do that? I am going to have to nationalize these banks, and then break them up. Well, we’re really not equipped to run the entire financial system out of the Treasury. And the system is in such disarray and chaos that we are more likely to create more crisis, than resolve the crisis if we do that. Which is not a terrible argument.

Geithner is, of course, the villain of Sheila Bair’s book, “Bull by the Horns.” My review of her book points out this statement.

Her tenure was stress filled and some of that stress came from the actions of soon-to-be Treasury Secretary Tim Geithner. The story opens in the crisis of late 2008 when the TARP legislation was first defeated by the House, then finally passed. She notes that the purpose proposed for the bill was immediately abandoned after it was signed. It was supposed to fund purchase of the toxic assets held by banks and by investors but quickly became a bailout for the big banks, judged too big to fail. Much of her time was spent fending off Geithner as he seemed to be obsessed with the welfare of CITIBank, a huge and weak international player. She is very critical of his efforts and of the CITIBank management.

Soon after this he became Treasury Secretary for Obama. Like a lot of people, he was thinking this.

Another kind of reform, which would eventually cause them to shrink a lot, would be vastly increasing the capital requirements, which has been floated by people, require them to hold not just about 7 percent or 6 percent but 20 percent, and what happens is they’d become a lot less profitable, they can’t take big big bets and no one would want to invest in them or work for them. But that has been roundly defeated at the regulatory level. I think, beneath that, the bigger problem is, virtually everybody at the table, even well-meaning government employees, when they are talking about what to do about these places, have — even if they aren’t thinking about it consciously, cannot help but consider the likelihood that the way they are going to make a living, a very good living, when they get done with government work, is to go work for one of these places.

That is called Moral Hazard and it has defeated any attempt at reform. And it may now be too late to fix it.

Analysts also point to concerns over Chinese market regulators, who they believe do not appear to have a good grasp of the market, even with the introduction of the circuit breakers. In an attempt to stabilize markets, China’s securities regulator has issued new rules to restrict the number of shares major shareholders in listed companies can sell every three months to 1 percent.
Marc Ostwald, a strategist at ADM Investor Services, believes that Soros’ comments — alongside a gloomy report Wednesday from the World Bank — only serve to cast a “long shadow” over global markets.
“It should be noted that the current turmoil distinguishes itself from 2008, when reckless lending, willful blindness to a mountain of credit sector risks and feckless and irresponsible regulation and supervision of markets were the causes of the crash, given that central bank policies have been encouraged and been wholly responsible for the current protracted bout of gross capital misallocation,” he said in a morning note.

Why is this different from 2008 ? It isn’t.

people didn’t want to know there was a bubble in the housing market, even though everyone knew something bad was going on.
It was really true, I remember coming across this phenomenon, on the wrong side of things: People were just thinking, “This doesn’t have to last very long for me to do well. And if it all goes down it’s not going to affect me. So why think about it too much?” There’s a great line in the movie: “You tell me the difference between corrupt and stupid and I’ll have my wife’s brother arrested.”

This explanation is still relevant.

For five years, Li’s formula, known as a Gaussian copula function, looked like an unambiguously positive breakthrough, a piece of financial technology that allowed hugely complex risks to be modeled with more ease and accuracy than ever before. With his brilliant spark of mathematical legerdemain, Li made it possible for traders to sell vast quantities of new securities, expanding financial markets to unimaginable levels.
His method was adopted by everybody from bond investors and Wall Street banks to ratings agencies and regulators. And it became so deeply entrenched—and was making people so much money—that warnings about its limitations were largely ignored.
Then the model fell apart. Cracks started appearing early on, when financial markets began behaving in ways that users of Li’s formula hadn’t expected. The cracks became full-fledged canyons in 2008—when ruptures in the financial system’s foundation swallowed up trillions of dollars and put the survival of the global banking system in serious peril.

That was part of it. The rest was the corrupt bargain that Democrats had with lobby groups for minorities.

I wrote about this in 2008 as it was happening.

Things did not begin to heat up again until the end of the Clinton Administration. The internet stock bubble left a lot of people with money to invest but few good opportunities. Many had taken their money out of the stock market after making plenty of money. Secondly, after 9/11, the Bush Administration was determined to avoid a recession brought on by the huge capital loss of the WTC collapse. The Panic of 1907 was precipitated by the San Francisco Earthquake and the huge losses to insurance companies. The Great Depression was partly a reaction to the default of war loans from World War I and the reparations demanded of Germany. There was fear that another severe financial panic would follow 9/11. In fact, that may have been a large part of the plan by Osama bin Laden. As a result, the banks had a lot of money to lend and they soon ran out of worthy borrowers. What to do ? Lend it to people with less than sterling credit. After all, houses were going to keep going up in price, weren’t they ?

Enter the chislers and scammers. Some of whom were former Clinton Administration members who got themselves appointed to the boards of the two big mortgage lenders. Did they have a broad background in mortgage banking ? No. They were politicians, like Jim Johnson who recently left the Obama campaign where he had been serving as the co-chair to vet potential VP nominees. What was his background ? Politics, not finance.

James A. Johnson is a United States Democratic Party political figure. He was the campaign manager for Walter Mondale’s failed 1984 presidential bid and chaired the vice presidential selection process for the presidential campaign of John Kerry. In the 2008 election, he is a member of the vice-presidential selection process for the presumptive Democratic nominee, Senator Barack Obama.

From 1991 to 1998, he served as chairman and chief executive officer of the Federal National Mortgage Association (Fannie Mae), the quasi-public organization that guarantees mortgages for millions of American homeowners. Previously, he was vice chairman of Fannie Mae (1990-1991) and a managing director with Lehman Brothers (1985-1990).

The rest is history but much of it is at that link.

The Trump Phenomenon

Sunday, December 27th, 2015

trump

A good column in the NY Post today describes the elites horror at the Trump supporters.

It was quite evident at Meet The Press this morning as the guests expressed suitable horror at Mr Trump’s progress toward the GOP nomination.

Now, after months of whistling past the graveyard of Trump’s seemingly inexorable rise and assuring themselves that his candidacy will collapse as voters come to their senses, a CNN poll released Wednesday showing Trump now lapping the field has the GOP establishment in full meltdown mode. The survey shows Trump with nearly 40% of the primary vote, trailed by Ted Cruz at 18%, Ben Carson and Marco Rubio tied at 10%, and the also-rans (including great GOP hope Jeb Bush) limping along far behind.

I am not a Trump supporter but I am intrigued at the steady progress he is making toward success. I have been a fan of Angelo Codevilla’s characterization of America’s Ruling Class.

The recent collapse of Republican Congressional resistance to the left’s political agenda as noted in the surrender of Paul Ryan to the Democrats in the budget, has aggravated the Republican base and its frustration.

Ryan went on Bill Bennett’s radio show on Tuesday to tell his side of the story, which involves the fact that he inherited from outgoing Speaker John Boehner an unfavorable budget framework, as well as some of the tradeoffs involved (especially defense spending). He also laid out the argument I’ve heard elsewhere, which is that he needed to “clear the decks” so that a real return to “regular order” budgeting next year will be possible. You may or may not be persuaded, but the contrast with Boehner is fairly plain, I think.

In other words, perhaps the omnibus should be thought of as something like the Dunkirk evacuation. But if so, we still need our Churchill to explain it and chart the path forward in a compelling way. This requires the presidential field to step up.

Dunkirk brought the British Expeditionary Force home almost intact, although minus their weapons. Ryan did the equivalent of surrender.

Their panic was best articulated last week in The Daily Beast by GOP consultant Rick Wilson, who wrote that Trump supporters “put the entire conservative movement at risk of being hijacked and destroyed by a bellowing billionaire with poor impulse control and a profoundly superficial understanding of the world .?.?. walking, talking comments sections of the fever swamp sites.”

Some might take that as a backhanded compliment. Can the GOP really be so out of touch with the legions of out-of-work Americans — many of whom don’t show up in the “official” unemployment rate because they’ve given up looking for work in the Obama economy? With the returning military vets frustrated with lawyer-driven, politically correct rules of engagement that have tied their hands in a fight against a mortal enemy? With those who, in the wake of the Paris and San Bernardino massacres by Muslims, reasonably fear an influx of culturally alien “refugees” and “migrants” from the Middle East?

The Daily Beast is not exactly the Republican voter and the “GOP Consultant” seems to be ignoring the possibility that his job prospects might be harmed by his contempt for the voters he is supposed to understand and convince.

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