June 10, 2010
Penn Jillette wants more politicians like Rand Paul
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June 9, 2010
Confused by international finance? Monty can help
If you’re finding the up-then-down-then-under-the-table performance of your investments unfathomable, you’re probably wondering who can explain it all in a way that makes perfect sense and allows you to figure out the best way to handle your personal finances. If you find such a savant, let me know.
For the “real” story about why the markets are doing an imitation of an unstable personality on conflicting medication, here’s Monty’s “Wednesday Financial Briefing”:
Nicholas Sarkozy and Angela Merkel are still waging war against “the speculators” who had the temerity to point out that Euorpean finances were a God Damn mess. A spokesmen for the holders of European sovereign bonds warned the leaders that they were “teasing the gorilla in the monkey-house”. Sarkozy was heard to say that he farted in their general direction and that their fathers smelt of elderberries. Chancellor Merkel only muttered darkly, “I will break you!”
Interbank loans at Spanish banks are drying up. This tightens credit and leads to busted bond auctions. “Fitch can kiss my ass!”, said an unnamed source at Banco Santander who blames the problems on Fitch’s recent downgrade of Spanish debt. Just to show how not-broke they are, Santander bought back their stake in their Mexican unit from Bank of America for $2.5 billion. When asked if this was a wise move given their weak balance-sheet, a Santander representative lowered his trousers and mooned the press-pool.
US debt will climb to 19.6 trillion by 2015, according to a Treasury report to Congress. Tim Geithner assured everyone that, in true Keynesian fashion, every dollar of debt translates directly into GDP growth. Somehow. When pressed on the issue, Mr. Geithner began to cry and had to be excused to the lavatory to pull himself together.
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June 8, 2010
Questions of basic economics
Daniel Klein surveyed nearly 5,000 voting-age Americans on their basic comprehension of the political trade-offs on economic issues. He also asked them to identify themselves on the political spectrum. There were some interesting correlations:
Consider one of the economic propositions in the December 2008 poll: “Restrictions on housing development make housing less affordable.” People were asked if they: 1) strongly agree; 2) somewhat agree; 3) somewhat disagree; 4) strongly disagree; 5) are not sure.
Basic economics acknowledges that whatever redeeming features a restriction may have, it increases the cost of production and exchange, making goods and services less affordable. There may be exceptions to the general case, but they would be atypical.
Therefore, we counted as incorrect responses of “somewhat disagree” and “strongly disagree.” This treatment gives leeway for those who think the question is ambiguous or half right and half wrong. They would likely answer “not sure,” which we do not count as incorrect.
In this case, percentage of conservatives answering incorrectly was 22.3%, very conservatives 17.6% and libertarians 15.7%. But the percentage of progressive/very liberals answering incorrectly was 67.6% and liberals 60.1%. The pattern was not an anomaly.
[. . .]
The other questions were: 1) Mandatory licensing of professional services increases the prices of those services (unenlightened answer: disagree). 2) Overall, the standard of living is higher today than it was 30 years ago (unenlightened answer: disagree). 3) Rent control leads to housing shortages (unenlightened answer: disagree). 4) A company with the largest market share is a monopoly (unenlightened answer: agree). 5) Third World workers working for American companies overseas are being exploited (unenlightened answer: agree). 6) Free trade leads to unemployment (unenlightened answer: agree). 7) Minimum wage laws raise unemployment (unenlightened answer: disagree).
H/T to Ghost of a Flea.
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Consumer debt doesn’t follow the script
Or, in a demonstration of individual rationality, doesn’t follow the script where consumers sacrifice themselves and go even deeper in debt to spark further economic recovery:
While some pundits out there might have you believe that the US economic recovery remains solidly on track, Friday’s May jobs report threw a spanner into those notions, and the latest reading on consumer credit offers little evidence that the crucial consumer intends to share with Uncle Sam the burden of bolstering the economy.
The Federal Reserve’s report on April consumer credit today shows total credit outstanding rose a little less than $1 billion, following a revised $5.4 billion drop in March; March credit was originally reported up $2 billion.
Within the details, the item that jumps out most is the decrease in revolving credit, which fell at a 12% annual rate and declined for the 19th straight month. Revolving credit outstanding has fallen 14%, or roughly $138 billion, since autumn of 2008. Non-revolving is roughly flat since late ‘08.
It would help if the pundits would settle on one of the two diametrically opposed roles that consumers are “supposed to” assume. At an individual level, consumers are being lashed for their profligate spending and borrowing habits, and excoriated for their unprecedented levels of personal debt. This is bad, the pundits say (and I don’t disagree): individuals and families should not be taking on so much debt and efforts to reduce outstanding debt are praised. However, consumers as a group are expected to spend, spend, spend in order to help pull the retail sector back into healthy growth.
So if they do the right thing as individuals, they’re doing the wrong thing for the economy as a whole? Perhaps the emphasis on consumer-led recovery is mistaken, especially given the levels of debt that consumers have already taken on.
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Attention drivers: Ohio police can now just “estimate” your speed
. . . and then write you a ticket based on their estimate, no further proof needed:
Police don’t need radar to cite you for speeding.
The Ohio Supreme Court ruled this morning that an officer trained to estimate speed by sight doesn’t need an electronic gauge to catch speeders.
The 5-1 ruling was a defeat for 27-year-old Akron-area motorist Mark W. Jenney and speeders across the state. Jenney had challenged a visual speed estimate by a Copley police officer, but a trial court and the 9th District Court of Appeals upheld his conviction.
So, Ohio drivers, expect to see your state assess a lot more speeding tickets (a nice form of revenue for the depleted state coffers), now that the police have been given carte blanche. There’s little reason for them not to treat this as a newly imposed tax on drivers: no evidence is required, other than the officer’s estimate, and the court clearly isn’t too worried about the legal implications of this.
As Eric Moretti says:
Hey “Supreme Court Justices” why don’t you guys get this part of what laws are supposed to do through your thick skulls. It’s safe to say that officers might be trained to identify speeds, and they might even be great at it — but it blasts the notion of burden of proof being on the state out of the water. You didn’t just blast it out, you nuked that fish to dry land. There is no factual evidence when officers have the ability to do this, “I think you were going 120 mph.”
Where is the public recourse for police officers who abuse their abilities? We have to take an officer’s (the state) word that we committed a crime? Did you guys even go to law school?
June 7, 2010
More progress toward equality in the US Navy
Strategy Page reports on two recent developments:
For the first time, a female officer will serve as CAG (commander of the air group on an aircraft carrier.) This is no surprise to those in navy. It’s a situation that’s been developing for decades. In the mid 1970s, the U.S. Navy began letting women into Annapolis (the Naval Academy) and flight school. Some 35 years later we have women commanding combat aircraft squadrons, cruisers, an amphibious task force (expeditionary strike group) and a strike group (a carrier task force.)
The newly appointed CAG, recently promoted captain Sara Joyner had, two years earlier, as F-18 pilot, Commander Joyner, completed a tour as the first female commander of a navy combat squadron (VFA 105). This included a seven month cruise to the Persian Gulf aboard the USS Harry S. Truman, where her dozen F-18Cs flew about 412 hours each. The squadron had 245 officers and sailors, including pilots and maintenance personnel. The squadron commander flew combat missions, in addition to running the squadron.
[. . .]
Another female Naval Academy graduate (Class of 1985) recently received an even more senior naval aviation command. This year, Rear Admiral Nora Tyson took command of Task Force 73 (CVN USS George H W Bush and escorts). This was another first.
Probably the most hopeful thing about these two appointments is that they’re pretty clearly not token appointments for political reasons: both women have earned their promotions and are deemed fully qualified for their new roles. That’s a far more positive thing for all women in the armed forces than attempting to meet arbitrary criteria based solely upon gender balance concerns.
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June 3, 2010
US & Canadian funding for War of 1812 bicentennial events
Colby Cosh floats the notion that one of the reasons for the huge disparity in funding for 1812 bicentennial events between the Canadian and American governments is “Maybe they’re still mad they lost”.
In the eyes of the world, the War of 1812 may always appear insignificant against its Napoleonic backdrop. But it did decide the destiny of a continent, persuading Empire and Union that it was better to have trade crossing the border than troops.
Prime Minister Stephen Harper was in Niagara Falls, Ont., on May 21, opening a new federally funded expansion to the city’s History Museum, which stands on the site of the ferocious July 1814 Battle of Lundy’s Lane. The federal and provincial governments are each giving the museum up to $3.2 million; for the feds, the money is part of a Throne Speech promise to commemorate the bicentennial of the war, “an event that was key to shaping our identity as Canadians and ultimately our existence as a country.”
Another $9 million in 50-50 federal-provincial cash is going to three Niagara Parks Commission sites: Old Fort Erie, McFarland House, and the Laura Secord Homestead. Ottawa has also set aside $12 million for improvements to 1812-related National Historic Sites along the frontier, including Gen. Brock’s monument at Queenston Heights. And Toronto is putting at least $5 million into a new visitors’ centre at Fort York.
But the only corresponding public funding on the other side of the border, as noted by the Buffalo News in April, has been a measly US$5,000 donation from the Niagara County legislature. Why isn’t Uncle Sam pulling his weight?
It’s more likely that the various levels of government are afraid of being seen to spend money on frivolous activities.
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May 27, 2010
Canada’s positive experience of US Prohibition
I knew that individual Canadians did well out of supplying booze to thirsty Americans during the period of Prohibition, but I didn’t realize how well:
. . . Prohibition — perhaps the maddest of mad American dreams [NR: in a dead heat with the current War on Drugs, I think] — did pretty well by our nation from 1920 to 1933. As American writer Daniel Okrent points out in his fine social history of the era, Last Call, the rivers of Canadian booze that flowed south enriched not only the Bronfman liquor empire, but our federal government. Canadians did make and smuggle illegal liquor, evading both Canadian taxes and American law, but we also made millions of litres of the legal, taxed stuff, the ultimate destination of which was of no concern to Ottawa. The amount of alcohol subject to excise tax — most of which went south one way or another — went from 36,000 litres in 1920 to five million 10 years later, and the excise tax on it rose to a fifth of federal revenue, twice as much as income tax.
Few in Canada had the slightest inclination to aid the American government in cracking down on alcohol use. When a U.S. Coast Guard cutter in pursuit of a Lake Erie rum-runner ran aground near Port Colborne, Ont., locals looted the vessel, then filled its engines with sand. About the only Canadians Okrent could unearth who thought the Dominion should help Uncle Sam seal his border were those making a fortune selling alcohol to American visitors. One way or another, most Canadians agreed with the smug satisfaction of CNR president Sir Henry Thornton, whose railway was growing fat off liquor tourism: “The dryer the U.S. is,” opined Sir Henry, “the better it will be for us.”
If there was an upside to what was known — at first, without a trace of irony — as “The Noble Experiment” in the U.S. itself, Okrent is hard-pressed to find it. America had always been awash in alcohol. (Johnny Appleseed’s fruit was inedible, but Americans still embraced his trees — virtually every homestead kept a barrel of hard cider by the door for visitors.) During the sodden 19th century, adult Americans downed 27 litres of pure alcohol each annually. That kind of demand wasn’t going to disappear no matter what the law said.
And yet the lesson has been forgotten. When drug prohibition finally comes to an end, historians will have a field day drawing the obvious comparison between the War on Drugs and the “Noble Experiment”. The theses practically write themselves . . .
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May 23, 2010
Jinxed train? Or jinxed by-standers?
Amtrak train #63 claimed two lives in separate incidents yesterday:
The Amtrak train struck two people within a space of roughly nine hours, including a man in Toronto, who was killed on Saturday.
Police say a man was walking on the tracks in Toronto, near Lake Shore Boulevard and Dunn Avenue, when he was hit and killed in the early morning.
[. . .]
About nine hours earlier, as the train made its way from New York City to Toronto, it had struck a woman on the Niagara Bridge in Buffalo. She also died, Ms. Connell said, but officials were still trying to determine the cause of death.
Not to be too snarky, but being hit by a train generally provides sufficient kinetic energy to kill people unfortunate enough to be in the way . . .
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It’s been 100 years . . . time to publish
According to The Independent, Mark Twain didn’t want his memoirs published until at least 100 years after his death:
Scholars are divided as to why Twain wanted the first-hand account of his life kept under wraps for so long. Some believe it was because he wanted to talk freely about issues such as religion and politics. Others argue that the time lag prevented him from having to worry about offending friends.
One thing’s for sure: by delaying publication, the author, who was fond of his celebrity status, has ensured that he’ll be gossiped about during the 21st century. A section of the memoir will detail his little-known but scandalous relationship with Isabel Van Kleek Lyon, who became his secretary after the death of his wife Olivia in 1904. Twain was so close to Lyon that she once bought him an electric vibrating sex toy. But she was abruptly sacked in 1909, after the author claimed she had “hypnotised” him into giving her power of attorney over his estate.
Their ill-fated relationship will be recounted in full in a 400-page addendum, which Twain wrote during the last year of his life. It provides a remarkable account of how the dying novelist’s final months were overshadowed by personal upheavals.
“Most people think Mark Twain was a sort of genteel Victorian. Well, in this document he calls her a slut and says she tried to seduce him. It’s completely at odds with the impression most people have of him,” says the historian Laura Trombley, who this year published a book about Lyon called Mark Twain’s Other Woman.
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May 22, 2010
The worst beverage in America
Thank goodness this chain isn’t in operation anywhere near here:
Another reason public service pensions are better than private ones
Megan McArdle points out another key difference between “ordinary” pensions and US state government pensions:
Public employees rack up overtime in their last year of work, with the active encouragement of their supervisors and even local politicians, then they retire with inflated pensions that can be greater than their base salary.
New York is the understandable focus, but these problems are hardly unique to my home state. In fact, New York is among the better states on funding of pensions, because they actually have to do some. Other states kinda sorta haven’t really bothered — at least not at anywhere near the levels that would be needed. New York’s problem is notable only because its public sector unions are unusually powerful.
The problem is that these things are nearly impossible to change. People have worked for twenty years or more under the expectation of pensions that were calculated this way; you can’t just wait until they’re 58 and say “Ha, ha, just foolin’.”
<sarcasm>Of course, the money will always be there, right? No reason for anyone to change their expectations.</sarcasm>
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May 21, 2010
California’s version of the Greek public service problem
David Crane shows why California’s public pension scheme has much in common with the Greek pension scheme, in the sense of a mind-boggling disconnect from economic reality:
In 1999 then California Governor Gray Davis signed into law a bill that represented the largest issuance of non-voter-approved debt in the state’s history. The bill SB 400 granted billions of dollars in retroactive pension boosts to state employees, allowing retirements as young as age 50 with lifetime pensions of up to 90% of final year salaries. The California Public Employees’ Retirement System sold the pension boost to the state legislature by promising that “no increase over current employer contributions is needed for these benefit improvements” and that Calpers would “remain fully funded.” They also claimed that enhanced pensions would not cost taxpayers “a dime” because investment bets would cover the expense.
What Calpers failed to disclose, however, was that (1) the state budget was on the hook for shortfalls should actual investment returns fall short of assumed investment returns, (2) those assumed investment returns implicitly projected the Dow Jones would reach roughly 25,000 by 2009 and 28,000,000 by 2099, unrealistic to say the least (3) shortfalls could turn out to be hundreds of billions of dollars, (4) Calpers’s own employees would benefit from the pension increases and (5) members of Calpers’s board had received contributions from the public employee unions who would benefit from the legislation. Had such a flagrant case of non-disclosure occurred in the private sector, even a sleepy SEC and US Attorney would have noticed.
Until very recently, public service pension schemes might as well have been listed in the dictionary under “soporific” — except for the beneficiaries, nobody paid much attention. Even so, you’d think that the breathtaking assumptions in the Calpers bill would have woken up at least a few politicians and reporters. Of course, no political body has an effective “Office of Realistic Assumptions” to run proposed legislation past (although it wouldn’t be a bad idea), so it might well be that nobody bothered to check the sums before the bill was passed.
Or, more likely, that nobody voting that day expected to be held accountable for the outcome.
Update: Good news! The state legislature just passed new regulations! That’s bound to fix the problem, right?
Oh, wait . . .
California’s public pension funds would have to report the ethnicity and gender of some of the outside investment managers they hire under a bill that passed the state Assembly on Thursday.
The bill states that businesses owned by women and minorities are not adequately represented in the state’s pension fund portfolios, compared to their proportion of California’s population. It passed on a 41-22 vote and now moves to the state Senate.
Well, that will certainly fix the funding issues in no time, won’t it? Your California state legislature, constantly working for you!
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“Courageous Channel” exercise cancelled in South Korea
Strategy Page reports that a regular exercise has been cancelled to avoid further raising tensions between North and South Korea:
In South Korea, the semi-annual American evacuation (for American civilians) exercise has been cancelled. This was because relations between North and South Korea are particularly tense. It was felt that this exercise, which involves setting up the 18 evacuation points and having 10,000 people actually go through some of the procedures involved during an evacuation, might make the unstable North Koreans do something rash. The tension is the result of North Korea torpedoing a South Korean warship two months ago, killing 46 sailors. The North Koreans officially denied they did it, although North Koreans have been congratulating each other about it, and the North Korean general in charge of such things was very publicly promoted for no particular reason. Recently, South Korea announced it was certain the ship was sunk by a North Korean torpedo. North Korea called that accusation an insult and threatened war.
Called Courageous Channel, the evacuation drill has been held twice every year (in the Spring and Fall) since 1996. That was when someone noticed that there a lot more U.S. citizens living in South Korea, particularly in and around the capital Seoul. This city contains a quarter of South Korea’s population, and is a primary target for any North Korean invasion. The city is within range over a thousand North Korean guns and rocket launchers. If there were an actual evacuation, some 140,000 American citizens (and some non-citizen dependents) would be moved south.
The report on the sinking of ROKS Cheonan was issued earlier this week.
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May 19, 2010
Military bureausclerosis, explained
Like many bureaucracies, the US Army has a plethora of generals running an organization that is far from its maximum historical size. Those generals all need staff, the staff need working space, transportation, support staff of their own, etc. Multiply that a few times and you get stories like this:
Gates rattled off examples of costly bureaucracy inside the military, as well. A simple request for a dog-handling team in Afghanistan must be reviewed and assessed at multiple high-level headquarters before it can be deployed to the war zone. “Can you believe it takes five four-star headquarters to get a decision on a guy and a dog up to me?” Gates said to reporters Friday.
The Armorer gets to the real point of the story, rather than the one Gates thinks he’s making:
I’ll just take this statement: “Can you believe it takes five four-star headquarters to get a decision on a guy and a dog up to me?”
And say — “Gee, Mr. Secretary, I can’t believe that a decision on a guy and a dog has to get to you.”
If you’re making those kinds of decisions, that’s just another reason the Services have put that many Generals in the loop.
This is what, in the private sector, is called micromanagement and it’s generally thought to be a bad thing, and a sign of incompetent leadership. What’s it called in the US Army?
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