Chronicle of the Conspiracy

ONE DULL AXE

2010-03-06T18:41:00.005-05:00

My DC-insider friend "Mick Danger" seems to think that somehow I'm to blame for the collapse of the Obama administration's public prestige. Mick, flattery will get you everywhere!

This is all your fault, Don, pointing out as you do the many mistakes of the Obama Era, Year One. If David Axelrod�s dream of total magical mystery transformation dies, he knows that the bloody knife will be found in your hands.
And in mine. And in the hands of all but 47% of the likely voters in the U.S.

Now, take a closer look at his report card (below) and you�ll notice that The O�s only passing grade (75% or higher) was in �Politically Liberal,� hardly the course of choice by most Americans these days.

�Trust Obama on Economic Crisis� is �28%�.
Say that again, Mick? Only 28% of those polled trusted Obama on the Economic Crisis? Ouch.
28% is no mere �ouch,� it�s a knife at the neck!
In other polls, the �Economy� (not precisely the same as �Economic Crisis�, I grant you) scores as the single most important issue. 84% is a Wow number.

OK, then, Mr. Mick Danger, on whose authority do you rely when you assert that all this is Don�s fault?
Why, on David Axelrod -- the Axe Man Himself -- in this story (a bit of a torch song) in today�s New York Times:
Mr. Axelrod said he accepts some blame for what he called �communication failures,� though he acknowledges bafflement that the administration�s efforts to stimulate the economy in a crisis, overhaul health care and prosecute two wars have been so routinely framed by opponents as the handiwork of a big-government, soft-on-terrorism, politics-of-the-past ideologue.
See, it�s not the President�s fault and certainly not the Axe�s fault. He says so himself. Let�s examine his statement again. Key words: �bafflement� and �framed.�
The declining public opinion of the President, seems to say the Axe, is the fault of those who pointed out that the heavy burden of the cost of Obama�s substantive policies will sink our national boat.
Is Axe really �baffled�or just reeling in another slow fish from the NYT?
Does he really mean to infer that because people like you and me pointed out early that the $1 Trillion stimulus smorgasbord of pork and government union featherbedding would not stimulate anything but the size of the public debt, is it therefore our fault that only 28% of those polled �trust� Obama on �the Economic Crisis� at a time when 84% of the public believes the �Economy� is the most important issue to them as voters?
In his twisted mind, it does not redeem us that we were (and remain) correct. We are bastards!
Hey, Axe: If the President is actually guilty of being a big-government, soft-on-terrorism, politics-of-the-past ideologue, no one needs to frame him as such. No one needs point it out. 75% of the public believes it already.
[Time out for a little lesson to sharpen up the Axe, in case he�s a reader: Your bafflement, if it exists at all, is caused by breathing in your own exhaust. Instead, take in the fresh air of six easy steps from ole Mick:
1. The public will follow a new president in almost any direction for the first six months, particularly a bright and attractive one who was elected by a big margin.
2. In months 7 and beyond, the same public will expect that president to produce something. We�re not picky or overly demanding but your agenda better relate to our needs.
3. Those who produce failures will lose the public�s support but not necessarily their affection. It�s not impossible to recover, but it�s very hard.
4. Incompetence is bad, but some of it is expected.
5. Misleading is worse. Lying is deadly.
6. Those presidents who lose most, though, will be those who the public sees as taking the country in the wrong direction while casting blame on others and lying about their own mistakes.
Got that? Has next to nothing to do with �communications.�
By the way, why would the Obama White House be so incompetent, mislead and lie, about job creation numbers if their Stimulus program � year one�s only �accomplishment� -- was actually creating real jobs? Doesn�t the Bureau of Labor Statistics exist to count real jobs? Which Obama team member was supposed to be in charge of that?

Enough messing with Joe, that�s too easy.
Back to man-handling the Axe: Once again the lost souls at the NYT meet a loser liberal warrior and become consumed in empathy. In one of the final grafs, the Axe ponders an exit.
As Mr. Obama began his term, Mr. Axelrod told him he would stay at the White House for a finite period � believed to be about two years � and that time frame remains unchanged. �I�ve learned more things in the last year than I will ever learn in my life,� he said. �It�s just something you can�t do forever, or it will kill you."
No, not so fast. You stay right inside the wheelhouse of the White House. Stay Baffled...or Pretending. Moreover, keep blaming us. Please, do more speeches and stunts on the healthcare bomb. We think you can drive The O�s numbers down if you work at it.
TTFN

KUDLOW REPLAY

2010-03-04T23:58:00.000-05:00

Here's the YouTube video of tonight's appearance. I love Larry's new graphic style! Very clean!

JOURNALISTS, THAT'S WHO

2010-03-03T09:45:00.003-05:00

That being the answer to the eternal question, "Who cares for a hostile opinion based on incorrect, easily disproved assertions?" My DC-insider friend "Mick Danger" elaborates:

In the opinion-slinging world we live in, lobbyists are easy game for the lazy man of prejudice. Bank lobbyists are easiest among them. Just fire up the Word Doc and blaze away: the next crisis in our financial system is being caused by evil bank lobbyists undermining reform as in �real reform.�
See this nonsense:
They�ve successfully diluted financial reform. Breakups and harsh limits on trading activities seem unlikely. Banks may face a new consumer regulator, but its power is evanescing daily.
How f#cking easy is that, dude?
Real reform would be returning responsibility to every financial transaction. Regulation, properly conceived, could assist that. Badly conceived, over-wrought regulation leads only to litigation and fear. Fear equals �stop.�
The current debate is a litigator�s dream and everyone�s else nightmare. Will Barney prevail over Chris? Will Shelby sabotage Corker? Blah, blah, blah. None of the current legislative or regulatory proposals goes to the heart of the last problem or averts the next.
Think a supercharged Fed has the capacity to stop systemic risk? Ah, no.
Think that a truly powerful Consumer Finance Protection Agency will protect consumers from getting financed? (Ahem, why, yes that�s all it can do if it does anything at all.)
Think the same Senate Banking Committee which ignores Fannie & Freddie now (as it has before) understands the vital importance of reining in financial institutions which are out of control?
This is like the government�s approach to pollution: sue every farmer over every petty violation but ignore the toxic waste on every military compound because well...that�s the government�s fault.
A few thousand more cops crawling around inside banks and brokerages will not help restore economic vitality to an economy where credit is f#cking absent.
Every single lender is afraid of the bank examiner sitting, right now, inside their offices asking them to raise tier one capital which translates into �don�t lend.� Oh, and Basel the Third will be by later this year to ask you to raise it again.
Last rant: who cares that a once promising journalistic bunch like �Breaking Views� is pushing uninformed, incorrect political tripe? Well, I guess I do because of what it portends.
This same broken drum will be beaten a million times by journalists seeking an easy narrative to round-up the usual suspects. Meanwhile, while bonuses are back in the surviving Wall Street firms, paranoia still reigns inside banks which face the public and used to feed businesses large and small. Yes, the big banks are content, for now, to borrow from the Fed at near zero and make money on the carry. Ain�t no future in that.
Lobbyists Scaling Back Real Reform? Nah, just a few hundred registered representatives of private sector financial institutions trying to limit the government�s plan to hurt their customers and their business during a populist feeding frenzy.
The horror is the ignorance of the consequences of this same ole blame game aimed by those inside Government at everyone outside their walls. Who gets hurt? Someone out there who might deserve a loan and could create an actual job one day.

P.S. Full Disclosure: I am no longer a lobbyist (happily) but spent 21 years helping businesses and citizens exercise their First Amendment rights �to petition the Government for a redress of grievances.� That very same First Amendment which protects freedom of speech and of the press.

PLAY OBAMA BULLSHIT BINGO!

2010-03-01T20:29:00.003-05:00

Everyone can be a winner! It's win-win! (That's a hint.)

1. Before Barrack Obama's next televised speech, prepare your "Bullshit Bingo" card by printing out the form above. 2. Check off the appropriate block when you hear one of those words/phrases.

3. When you get five blocks horizontally, vertically, or diagonally, stand up and shout "BULLSHIT!"

Testimonials from past satisfied "Bullshit Bingo" players:

"I had been listening to the speech for only five minutes when I won." -- Jack W., Boston

"My attention span during speeches has improved dramatically." -- David D., Florida

"What a gas! Speeches will never be the same for me after my first win." -- Bill R., New York City

"The atmosphere was tense in the last speech as 14 of us waited for the fifth box." -- Ben G., Denver

"The speaker was stunned as eight of us screamed "BULLSHIT!" for the third time in two hours."-- Harry A, Chantilly

"This is the most fun I have ever had with my pants up!"-- Robert H. Portland

Thanks to reader Jameson Campaigne.

PELOSI BAKES THE PIE OF MADNESS!

2010-02-27T16:38:00.002-05:00

Reading this report from my DC-insider friend "Mick Danger," one thinks of the Angela Lansbury character from Sweeny Todd -- Mrs. Lovett, the deranged baker who puts human remains in her meat-pies!

There is a website called Pelosi Pie which has nothing to do with Nancy Pelosi or even with pie, unless you like that very bad pop song �Cherry Pie� from the hair band Warrant.
Here, though is something from today�s Politico Playbook, even more bizarre: Speaker Pelosi lost in a metaphorical kitchen, blabbing about pie, as in baking & selling pie.
(Speaker Pelosi talks to Candy Crowley in an interview taped yesterday in her suite at the Capitol, for airing on �State of the Union� tomorrow [Sunday February28]:)
CROWLEY: We looked at our polling numbers, just from yesterday, we had almost three-quarters of Americans who said they need to drop this bill, just stop talking about health care and move on to something else. Or, they need to start new. So, don�t the Republicans have a point?
PELOSI: The point is that we have a responsibility here. And the Republicans have had a field day going out there and misrepresenting what is in the bill. But that is what they do.
CROWLEY: So, it has been method �
PELOSI: But that is what they do.
CROWLEY: You think people don�t understand the bill?
PELOSI: No, I don�t think�there isn�t a bill. When we have a bill, which we will in a matter of days, then that is the bill that we can sell. Our bill, the House and the Senate bill, had major differences which we are hoping now to reconcile.
And then when we have a bill�you�as I say, you can bake the pie, you can sell the pie, but you have to have a pie to sell. And when we do we will take it out there.
I feel very confident about what is in there, because if you are�if you are concerned about having access to health care, as most Americans are around their kitchen tables, then they will have access to health care.
Her method to the madness must be that by the time she fully dives into the baking & selling pie babble, I bet everyone forgot that factoid that Candy Crowley mentioned, namely that CNN has a poll showing almost 75% of the public wan to scrap the healthcare bill.

HOPE THEY DON'T SPEND TOO MUCH FEEDING THAT DEFICIT COMMISSION

2010-02-26T13:16:00.003-05:00

DC-insider "Mick Danger" reports:

Evidently, President Obama understands that the Government spends and borrows too much. Why else would he assemble a bipartisan blue ribbon commission to analyze our national debt and recommend corrective action?
Well, it could be as simple as a genuine desire to fabricate a solution to our fast-rising fiscal imbalances to avert a Greece-y future here in America.
But then, why put the SIEU's Andy Stern on it?
Doing so is proof that President O intends to not do that which he complains �Washington has avoided the tough choices necessary to solve our fiscal problems.� Stern is a goalie. Doesn�t much matter which player on this Commission tries to score, Stern will block every single shot.
Serve this bunch nothingburgers for lunch.
White House rhetoric:
For far too long, Washington has avoided the tough choices necessary to solve our fiscal problems. I am proud that these distinguished individuals have agreed to work to build a bipartisan consensus to put America on the path toward fiscal reform and responsibility. I know they�ll take up their work with the sense of integrity and strength of commitment that the American people deserve and America�s future demands.
That�s in direct conflict with reality.
MORE COMMISSION MEMBERS: President Obama has appointed four members to the bipartisan deficit commission he established last week, an administration official said. The appointees are: Andy Stern, the president of SEIU; David Cote, the Honeywell International CEO; former Federal Reserve Vice Chairman Alice Rivlin; and Ann Fudge, a former Young & Rubicam Brands CEO.
MORE: Obama said in a statement: "For far too long, Washington has avoided the tough choices necessary to solve our fiscal problems. I am proud that these distinguished individuals have agreed to work to build a bipartisan consensus to put America on the path toward fiscal reform and responsibility. I know they�ll take up their work with the sense of integrity and strength of commitment that the American people deserve and America�s future demands."

THE WAGES OF HATE

2010-02-24T12:38:00.002-05:00

You get yourself in trouble with this kind of thing. Here's the latest in Barry Ritholtz's ongoing war against me -- hardly a month goes by that he doesn't take the opportunity to defame me. Guess he's still smarting from that time when I held him to account for all the money he lost his cultish followers with his relentless bearishness duing the 2003-2008 bull market.

On his blog today, he quotes the conclusion of my SmartMoney column on Monday.

�All I�m saying is that you�re making a huge mistake if you mindlessly send all your money overseas � just because all those other economies are the devil you don�t know. The devil you do know may be your best bet.�

OK. Seems like a mild enough statement. I'm simply noting that there is a widespread anti-US bias among US investors, and I cautioning against that. So here's Ritholz's rejoinder to that:

One of the greatest overseas investing trades � in the history of mankind � is very likely about to begin.

Really, Ritholtz? That's a pretty bold prediction of yours, and I'm going to hold you to it. "History of mankind"? I'm flattered if betting against me makes you say dumb s**t like that. But then again I guess I would say things like that too if nobody took my predictions seriously, and all I was doing was performing for a small audience of devoted cultists. Sorry, Barry, unlike you I take this stuff seriously.

TOO MUCH INFORMATION

2010-02-23T08:52:00.003-05:00

There's a big profile of Paul Krugman in the New Yorker, by Larissa McFarquar, in which we learn many intriguing things about the lifestyle of the great populist and opponent of great wealth -- for instance, he owns three homes (other than his base in Princeton, one in Manhattan and one in St. Croix). But there is more. So much more.

For example, as the New York Magazine blog points out, we learn all about Krugman's underwear and how he washes it.

It�s not so much the washing as the drying that presents a problem. Years of experiments have failed to yield a satisfactory solution. Krugman has discovered that it is slow and quite risky to use a hair dryer with any item that involves elastic. Long ago, in Tel Aviv, his roommates found him attempting to dry his underwear in a frying pan.
�The trick with underwear is to wring it out and then press down � �
�I learned this from yoga workshops,� Wells says. �You get out as much excess water as you can, then you lay a dry towel flat on the floor, you lay the article of clothing on the towel, and roll it up like this � �
�And then it�s only slightly damp in the morning when you have to put it on.�
�No, it�s usually dry. We also do that on bike trips.�
�Because you can�t take forty pairs of underwear.�

Why does he need forty pair? Unknown. But perhaps we can learn by following the helpful "Related links" provided on the New Yorker website.

Yep, that's right. This is what journalism has come to now. A live promo event in which the author and her subject appear together -- how's that for objectivity? And the song? I don't even want to know...

Update... Here's more from David Hogberg at IBD:

One should expect plenty of juvenile antics from universities these days, but this is a little creepy even by academic standards. From a New Yorker profile of New York Times pundit and Princeton economist Paul Krugman and his wife Robin Wells:
�I was nervous until they finally called it on Election Night,� Krugman says. �We had an Election Night party at our house, thirty or forty people.�
�The econ department, the finance department, the Woodrow Wilson school,� Wells says. �They were all very nervous, so they were grateful we were having the party, because they didn�t want to be alone. We had two or three TVs set up and we had a little portable outside fire pit and we let people throw in an effigy or whatever they wanted to get rid of for the past eight years.�
�One of our Italian colleagues threw in an effigy of Berlusconi.�
�I put out some coloring paper and markers so that people could write stuff on it and throw it into the fire. People really felt like there was stuff they wanted to shed! I had little hats and party whistles.

I'm trying to visualize the entire "econ department, the finance department, the Woodrow Wilson school...all very nervous."

THE LAST TRIANGULATORS

2010-02-22T10:35:00.002-05:00

From my DC-insider friend "Mick Danger":

This February 25, the President of the United States will conduct a show trial indicting Republican Representatives for the �shame� of abiding by their principles and listening to their constituents on the issue of health care. I believe the Republicans will hold.
Would any Democrats ever dare to be so bold to think for themselves? Well, yes, but only in small numbers and without effect. Come with tour guide Mick and meet the �Third Way,� the organization of moderates among the House and Senate Democrats.
The title was inspired by a yearning affection for a return to Clintonian triangulation. �Third Way� as in neither Right nor Left. Nor Straight?
Nor-easter?
Lots of chattering advice in the media about how President Obama ought to triangulate. Well, to my eyes, he�s more likely to try to strangulate.
Remember just a few weeks ago, President Obama kissed goodbye Senator Blanche Lincoln during his love-in/slap-fest with Senate Democrats?
She is the Third Way Senate Chair. A week after that very event, Third-Way-er Senator Evan Bayh announced he was out the door by his own motion.
Here�s the New York Times on that meeting:
Senator Blanche Lincoln of Arkansas added: �People out there watching us, they see us nothing more than Democrats and Republicans up here fighting.�
Senator Evan Bayh of Indiana said: �Why should the Democratic Party be trusted? And are we willing to make some of the tough decisions, to actually head this country in a better direction?�
The president acknowledged the difficulties, but implored Democrats to remember why they first ran for office. He urged lawmakers to ignore the political chatter on cable television and in the blogosphere and �get out of the echo chamber� in Washington.
Now, here�s the Mick Danger translation:
�ignore the political chatter on cable television and in the blogosphere� means �pay no attention to your constituents.�
�get out of the echo chamber in Washington� means �I come to you from the hermitically-sealed bubble of the Oval Office and implore you to pay no attention to your constituents.�
�remember why they first ran for office� means �pretend you never learned a damn thing from years of actual experience about the importance of paying attention to your constituents.�
Yet, as a quick check of their publications proves, Third Way-ers speak in careful tomes about all kinds of topics.
Just that...ain�t nobody in the Democratic party wants to listen.
Wonder how these Third Way-ers will vote on the final chapter of Obama Care, Reconciliation Style? As Mick has said before, Washington loves to take a sweet and peaceful word like �reconciliation� and turn it into a weapon.
Now, over at the Marines, their most elite unit is called �Force Recon�. The big difference there is that Force Recon aims at bad guys.
Obama has turned on his own. Maybe �Third Way� means �run for it!�

WHO DO YOU TRUST?

2010-02-19T10:08:00.002-05:00

That's "whom," actually. But be that as it may, the pollster Zogby has the answer. Only small business and local banks are deeply trusted, seemingly a proximity bias. Federal government is in the middle. Wall Street, labor unions and the news media round out the bottom of the list. So how come politicians always pick on Wall Street -- and not unions or the media?

VERY CLEVER NEW AD

2010-02-18T10:02:00.002-05:00

I didn't know the GOP had this kind of style. Very fun and cool.

Thanks to "Mick Danger."

KUDLOW REPLAY

2010-02-17T15:17:00.000-05:00

Here's the YouTube video of today's daytime appearance:

PETITION FOR CHAOS? DEADLINE IS THREE MINUTES AGO!

2010-02-16T14:23:00.003-05:00

My DC-insider friend "Mick Danger" turns his not yet entirely jaundiced eye to Indiana!

It�s a refreshing and healthy tonic for our wounded body politic when an average citizen seeks public office by attempting the brazen act of running for office and, out of innocence, tries to do so according to the rules.
Of course, I�m speaking about Tamyra d�Ippolito, the only announced Democrat seeking to replace the retiring Evan Bayh as Senator of Indiana. You might think she�s running against a Republican.

She�s says she�s running against �the machine� by which she means the official Democratic Party of Indiana. Tamyra says �the machine� spiked her appearance on MSNBC�s Rachel Maddow show:
�The machine has asked me to step down,� she said, in a reference to the Indiana Democratic Party. She added that she had been scheduled to be interviewed last night by Rachel Maddow but that, mysteriously, the machine got the interview killed.
�The car was coming,� she recalled. �Fifteen minutes before, I got a call saying, `We�ve cancelled the interview.��
The machine strikes again:
All that was a reaction to her claims that she�ll have the required number of signatures by the filing deadline today (as in noon today) and her open invitation to all Hoosiers to sign her petitions, Republicans included.
And again:
D'Ippolito was not specifically aware of Republicans who signed her petitions in order to cause problems for the Democrats, but she didn't have a problem with it: "I have no way to know that for sure, but I'm sure that is happening. It's common sense, I think that would be realistic."
Conservative, frenetic bloggers at Redstate lend her a hand.
If she gets the magic number, she�s the only Democrat on the ballot this November.
And:
If D�Ippolito gets on the ballot, that�s it. She�s the nominee. The Democrats won�t be able to challenge it or caucus to get another candidate on the ballot. They won�t be albe to get Ellsworth to run or any other viable Democrat. If you have time, make sure you sign the petition.

Update from "Mick"...

Ah, it seems our new friend Tamyra d�Ippolito is a little math-challenged. The machine wins by her default.
The Indianapolis Star reports:
D�Ippolito needed 500 signatures of registered voters in each of Indiana�s nine congressional districts. In the 7th Congressional District alone, which is entirely in Marion County, she filed only two petition signatures, 498 short. She also filed one signature in Marion County for the 5th Congressional District.
Democrats now will have their state central committee meet to settle on a nominee.

JUST CALL HIM JOE, AS IN JOE DON'T KNOW

2010-02-15T16:30:00.002-05:00

From a no longer snowbound "Mick Danger," our DC-insider friend:

Vice President Joe Biden is famously nice in person, famously long-winded and famously in love with the U.S. Senate. On the subject of himself, why, it�s his fave! Seriously, he�s had thousands of long discussions with himself on all the important issues of the day � over many decades! -- and each time, he�s comes out on top.
He had one of those discussions with himself just yesterday. Well, he wasn�t completely alone as Bob Schieffer and the CBS crew from Face the Nation was there to record it.
http://www.cbsnews.com/video/watch/?id=6207628n&tag=contentMain;contentBody Fortunately, with a pro like Bob Schieffer involved it wasn�t overly long. Nothing like his days chairing Senate hearings where then Senator Biden would ask �just one more question� at which point, you could catch the first few sentences, go clean out your garage and still be back in time for his summation...of that �one last question.�
You�ve heard the news that yesterday on dueling Sunday chat shows, that Veep Joe took swipes at former Veep Dick (ahem) and vice versa. Score that squabble however you will. The fight I prefer was Joe vs. new Senator Scott Brown. See this from one of Sunday�s live blogs on Politico:
Sen. Scott Brown, the recently sworn in Republican from Massachusetts, needs to get his facts straight before he goes criticizing the Obama administration on its handling of terrorists, Vice President Joe Biden said Sunday.
Responding on CBS�s �Face the Nation� to Brown�s comments that the United States should be spending money catching terrorists, not spending money to give them a lawyer, Biden said, �I don�t know whether the new senator from Massachusetts understands: When you get tried in a military tribunal, you get a lawyer too.�
�So, it�s good if we begin to learn the facts about all these things. You get a lawyer whether you�re in a military tribunal, or you�re in a federal court,� Biden added.
Today, Politico quotes a response from the new Senator from Massachusetts:
Sen. Scott Brown thinks Vice President Joe Biden was �off base� when he suggested Sunday that the Massachusetts Republican get his facts straight on the legal procedures for military tribunals.
�It was insulting,� said Brown, who frequently jabbed the administration during his Senate campaign for giving suspected terrorists legal representation.
On CBS's �Face the Nation� last weekend, Biden shot back that he doesn�t �know whether the new senator from Massachusetts understands: When you get tried in a military tribunal, you get a lawyer, too.�
�He�s trying to give me a lesson on military law, and I didn�t think it was appropriate,� Brown told POLITICO. �And I thought he was off base when it comes to explaining to the American people that somehow I need a lesson on whether people get attorneys � of course they get attorneys. There�s a difference as to what type of attorney they�re going to get and when they�re going to get that attorney, and how are they treated, and what rights do they, in fact, get.�
Brown said he is particularly incensed by Biden�s remarks because he�s served in the Massachusetts Army National Guard for more than 30 years and is currently the Guard's top defense attorney in New England.
Score that for the new guy.

A MARRIAGE ON THE ROCKS?

2010-02-12T18:51:00.000-05:00

Steven Hales contributes,

What came first the relation or the law? I posit that the relation came first or there would be no need for the law. Disagreements and conflict form the basis of much of our legal code so it was the relation or the behavior that had to come first not the law. If we can agree on that point we can agree that government arose from relations and as those relations grew more complex more conflicts arose and the law responded and grew more complex. They are part of a symbiotic evolutionary process. I view all inventions as technology, ala Brian Arthur and other "new institutionalist" economists. Government and the law are inventions and by definition are technologies. They have all the elements of a technology. They are assembled from other technologies and something new is created. The last great evolution of government came in the 18th Century. It was assembled from a variety of other ideas or technologies. Liberty and Equality, Self Government, Representative Democracy and our greatest innovation, the separation of powers. At about the same time as our evolutionary experiment began another great invention was born, Capitalism. It was born out of the Industrialization of production and together our experiment in governing and capitalism became intertwined into a single system of production and governance. Shortly after the union of these great technologies a third invention was born, the corporation. Not only did the organizing principles of the corporation extend to the production of goods but also to the government. Our government began to look like a corporation with all the attendant complexities. Like all transformative technologies it reached into every part of life. This marriage of government and capitalism under a corporate governance structure is often in conflict and like all marriages each spouse, at times, wants a divorce. Bad things are said but the marriage endures and grows stronger. We see the current estranged spouse in the White House regularly throwing tantrums and hurling dishes in the direction of capitalism now symbolized by the corporation and its financiers, the evil bankers. But this is just so much theater and the marriage will endure, it has to, each depends on the other.
Currently, our government is trying to get capitalism to do the dishes and take out the trash and like most stay at home spouses feels generally unappreciated. It has also taken to comparing itself favorably to capitalism's last spouse and is saying how good it is compared to that bitch and how messy she left the house and what a shamble the finances are, she was a spendthrift, blah, blah, blah. It gets so bad that you have to tune her out. What's worse is that her sisters chime in from time to time to berate capitalism and give him a good talking to. But like all dutiful spouses capitalism takes it and continues to support them.
My point here is not just humorous but informative when looking at the growth of government and the increasing complexity of our economic relations, they are intertwined and spring from a common heritage. There is a dynamic tension between them but each needs the other to survive and thrive. Capitalism needs the institutions of government to reduce uncertainty from investments. It needs intellectual property protection, it needs a system of regulation to enforce standards, whether they be building codes or a system of weights and measures or any of a host of more arcane regulations that on their face may seem burdensome or unnecessary. But government also needs capitalism to flourish so that its goals of wealth and prosperity for its citizens is fulfilled. The complexities of reaching those goals seems at times overwhelming because economic growth lags its citizens expectations. When economic growth fails to emerge fast enough the dynamic tension between government and the institutions of capitalism come into sharp relief. But government can't rush innovation or changes in our economic life it can only provide an environment for capitalism to flourish and evolve.

TODAY'S EPISODE OF "THE MOST UNHAPPY MAN

2010-02-10T18:20:00.003-05:00

From my snowbound DC-insider friend "Mick Danger":

Speaking of Paul Krugman and Wikipedia (I refer, of course, to the excellent post on your blog yesterday by Steven Hales), I dove into Wikipedia today and learned a factoid about Thomas Jefferson from their invisible hands... namely that concerning the expression "All men are created equal,"

Jefferson borrowed the expression from an Italian friend and neighbor, Philip Mazzei. ...Thomas Jefferson first used the phrase in the Declaration of Independence as a rebuttal to the going political theory of the day: the Divine Right of Kings.
Paul Krugman needs to move next door to some Italians. Maybe even above a restaurant. He needs to be around people who count history by the century in double digits. Walk next to those who dance around any obstacles to happiness. Dine with those who open bottles of wine by the hour. Or half-hour.
Now, let us ask the question: Is it true that �All Men Are Created Equal�?
Does that include baseball players, bankers and columnists?
Tell ole Paul Krugman if it�s true, because he�s got it all wrong. See, if we�re all equal, we ought to be judged by our individual merits and neither favored nor disfavored by the whims of government. There is no Divine Right of Kings.
Krugman concludes a blogpost today with the phrase, �We're doomed.�
Why does he say �we�re doomed�? He wants to incite greater anger by government at bonuses to bankers. Krugman was reacting to a Bloomberg BusinessWeek story entitled:
Obama Doesn�t �Begrudge� Bonuses for Blankfein, Dimon
Krugman was bitchin� and moanin� because President Obama didn�t condemn every single bonus.
Krugman asserts that banks are wards of the state. Ahem, no. There is plenty of blame to go around for all the causes of the financial crisis. The banks deserve a fair share and some reforms are necessary; much has already been done. What about the King�s mistakes? Fannie & Freddie? The Cuomo HUD? Friends of Angelo? (They were over-served.)
Krugman, in his juvenile burst of anger, didn�t comment on why Obama didn�t lambast them. Referring to the CEOs of Goldman and JP MorganChase, read the President�s own words:
�I know both those guys; they are very savvy businessmen,� Obama said in the interview yesterday in the Oval Office with Bloomberg BusinessWeek, which will appear on newsstands Friday. �I, like most of the American people, don�t begrudge people success or wealth. That is part of the free- market system.�
See, there is a system for governmental butt-in-ski over corporate compensation after all!
Are you a banker with a bonus? If so, answer the next two questions:
1. Are you personally known by the President?
2. Are you, in his sole discretion, �savvy�?
Then you earn the following grade: �NB�, meaning, �No Begrudge.� (Roughly the equivalent to those �S� grades we got in kindergarten for satisfactory lavatory skills.)
How about flogging the tens of thousands of unknown (and/or �not savvy�) bonus babies? Will that make Krugman smile?
No! Not until each and every bonus banker is bleeding in diagonal stripes from the cuts of the whip -- including these so-called K&S�s (known and savvy) -- Paul Krugman will remain bluer than blue.
He updates here, just to berate some silly White House PR types who tried to �clarify� the president�s previously clearly worded niceness to the two K&S�s. Essentially but not literally, Krugman blurts back, insults from imbeciles*!
Paulie! Leave the Gun, Take the Canoli!
Oh, and... gioia, felicita, pace e serenita!
* No offense intended to actual imbeciles.

KRUGMAN'S POLISH JOKE

2010-02-09T17:31:00.002-05:00

Reader Steven Hales says,

18th Century Poland? Seriously?
Paul Krugman, in his NY Times column yesterday, uses a curious allusion to 18th Century Poland to make a point about alleged Republican incivility but does he use this allusion correctly? He says,
A brief history lesson: In the 17th and 18th centuries, the Polish legislature, the Sejm, operated on the unanimity principle: any member could nullify legislation by shouting �I do not allow!� This made the nation largely ungovernable, and neighboring regimes began hacking off pieces of its territory. By 1795 Poland had disappeared, not to re-emerge for more than a century.
But is this correct reading of history? Let�s see where he gets this gem. Turning to Wikipedia we find:
In the 16th century no single person or small group dared to hold up proceedings, but from second half of 17th century the liberum veto was used to paralyze the Sejm and brought the Commonwealth to the brink of collapse. The liberum veto was finally abolished by the Constitution of 3rd May in 1791.
But why was the liberum veto established? It has to do with the Polish Magnates. Turning again to Wikipedia we find
In Poland and Lithuania all members of the nobility (szlachta) were equal under the law. "Magnate" (Polish: magnat) was thus not an official title but rather a position of social class, based on wealth. Magnates (or higher nobility) vied for political power with the lesser and middle nobility (see Ruch egzekucyjny) and the Kr�l (Monarch). From the second half of the 17th century, the magnates emerged as the victors in the struggle for power in the Polish-Lithuanian Commonwealth, as they were able to concentrate most of the land in their own hands and bribe smaller nobles to preserve the appearance of democracy: "Golden Liberty" in the parliaments, not only the local Sejmiks but also in the national Sejm.
The structure and rules of the Sejm were dictated by Polish law that seems to date to Feudal times. The consolidation of this power of equality, the illusion of democracy, in the ossifying use of the liberum veto for personal gain, could be a response by the nobility to the growing democratic movements in Europe and elsewhere in the 18th century, after all it was the Enlightenment and if nothing else it was getting increasingly easy for the nobility to lose their collective heads. It is this nobility who enabled and conspired with Russia, Prussia and Austria to carve Poland up through the three partitions. So, from the beginning the Sejm was not truly a Parliament from the second half of the 17th Century onward. It was the personal puppet of these landowners who dictated what the Sejm could or could not accomplish, it didn�t help that the diplomatic delegations of foreign powers bribed petty and landless nobles to use their liberum veto at strategic moments for the gain of their respective countries. Of course, it also didn�t help that Polish Kings were incompetent politicians and plunged Poland into ruinous wars both marshal and civil.
But what happened in Poland after the first partition in 1772? The democratic forces of change went against the nobility of Russia, Austria and Prussia. The Sejm under King Augustus pulled itself out of its lethargy and through his leadership, in defiance of his Russian masters (never mind that he and Catherine the Great were lovers), began a series of institutional and economic reforms that so alarmed his Monarchist buddies and the Magnates that they immediately began plotting the eradication of the Polish State. Therefore, it was the democratic ambitions of the Polish people, the bold action of King Augustus and the passage of the 1791 constitution that led to Poland�s demise not the liberum veto as alluded to by Krugman. In fact it was the exact opposite of what Krugman�s allusion claimed. It might be a useful rhetorical device, these historical allusions, but it does help if you get your facts straight and not be hoisted on your own petard.

KRUGMAN FILIBUSTERS KRUGMAN

2010-02-09T09:13:00.005-05:00

What a difference five years, and a change in the majority, can make for Paul Krugman...

New York Times, March 29, 2005:

...the big step by extremists will be an attempt to eliminate the filibuster, so that the courts can be packed with judges less committed to upholding the law than Mr. Greer. We can't count on restraint from people like Mr. DeLay...

New York Times, February 8, 2010:

Senators themselves should recognize this fact and push through changes in those rules, including eliminating or at least limiting the filibuster. This is something they could and should do, by majority vote, on the first day of the next Senate session.

Thanks to Jameson Campaigne.

REPUBLICANS AND THE POPULIST TEMPTATION

2010-02-08T21:40:00.002-05:00

My op-ed in Tuesday's Wall Street Journal:

The best stock market rally in 74 years may have ended on Jan. 19, the same day Republican Scott Brown won the Massachusetts U.S. Senate seat held by Democrats for 57 years. We don't know yet whether the alarming move down in stocks since then is simply a correction or something more serious. But the coincidence of these two history-making events raises troubling questions -- especially since a Republican resurgence, on the face of it, would seem to be good for business and good for stocks.

From the beginning of this historic rally of 73% over the 316 days since last March's market bottom, politics has been an important theme. That horrific bottom was reached after Democrats in Congress rammed through a $787 billion stimulus bill so quickly that no senator or representative could have possibly read all 1,073 pages of it. That hastily concocted porkfest should not be credited with turning stocks around. Rather, it should be blamed for the more than 18% loss that stocks suffered in the 24 days from the date of its enactment to the day of the March bottom.

The haste with which the stimulus bill was enacted made it seem certain that the cap-and-trade energy tax, unionization "card check," mortgage "cramdown" and health insurance nationalization would become law as soon as votes could be taken. It wasn't only the antigrowth implications of these initiatives that had investors terrified in March. It was the sheer recklessness with which they were being stuffed through the legislative pipeline under the Rahm Emanuel doctrine of never letting a good crisis go to waste. The crippling uncertainty of it all was making that good crisis worse.

Since then the historic stock market rally has tracked the demise, one by one, of all these initiatives, because investors could see that a political environment that had been far out of equilibrium was quickly finding its balance. Republicans stayed unified in their opposition, while in every case key Democrats lost their nerve. Since the stimulus, precisely nothing has been accomplished by the Obama administration or the Democratic Congress. The good crisis went to waste, and stocks soared.

Seemingly, the election of Scott Brown in Massachusetts should only be a continuation of that beneficent trend back toward political balance. At a stroke, it denied the Democrats their filibuster-proof Senate majority -- and opened up the real possibility of the Republicans taking control of one or both houses of Congress in November. Perhaps in 2011 a dream team, the same party configuration that proved so fruitful in the 1990s: Democratic president and GOP Congress.

So why did stocks collapse the moment the vote was tallied in Massachusetts?

It's because the immediate reaction to the Brown election -- in both parties -- has been a dangerous lurch toward antibusiness populism. The Obama administration's strategy has been to latch onto something that both parties can agree on: lynching Wall Street.

Just 24 hours after Mr. Brown's upset win, the White House let it be known that a radical plan to break up the largest banks, and to limit their size, was about to be announced. The next day the plan was revealed, and christened "the Volcker rule." What better way to lure Republicans onto a populist, antibank bandwagon than to associate it with the legendary Reagan-era figure?

Days later came the ordeal of Ben Bernanke's confirmation for a second term as Fed chair. Surely there are principled reasons for denying his confirmation, as there would be for any Fed chairman (they all have a way of being far from perfect). But it hardly seems possible that senators facing tough re-election challenges this year -- such as John McCain (R., Ariz.) and Barbara Boxer (D., Calif.) -- would just happen to discover those principled reasons in the hours immediately following the Brown election in Massachusetts.

More likely, they seem to have interpreted the fact that Mr. Brown wore a barn-jacket and drove a beat-up truck as indicating a voter preference for least-common-denominator populism. It's the low road to be sure, but desperate people do desperate things. And it might work. A recent NBC/Wall Street Journal poll showed that Americans with college degrees, and with more than $50,000 invested, supported Mr. Bernanke's confirmation. But those with only a high-school education, and with no money invested -- the classic populist audience -- opposed Mr. Bernanke's confirmation.

These developments have been profoundly destabilizing for stocks not because some version of the "Volcker rule" would necessarily destroy America's financial system, or because Ben Bernanke is utterly irreplaceable at the Fed. The crux of it is that it reveals a political process so dangerously narcissistic that it would use core institutions of the nation's economy as pawns in its own power struggles.

It's so dangerous because it potentially involves both parties, just when the Brown victory in Massachusetts holds out the hope of benign gridlock.

Don't think that Republicans can't be sucked in when an anti-Wall Street lynch mob gets its blood up. Recall that Sarbanes-Oxley, the devastating antigrowth response in 2002 to the Enron and WorldCom scandals, was passed with virtually unanimous support by Republicans in Congress, and signed by a Republican president. Recall that last year 85 House Republicans voted for a 90% tax on bonuses for any employee of any bank that took more than $5 billion in TARP money.

Investors got some good news last Friday. Stocks resisted following through on Thursday's sharp plunge after it was announced that the Senate Banking Committee's Democratic Chairman Chris Dodd and Republican ranking member Richard Shelby have reached an impasse on bank re-regulation. That's a nice downpayment on what investors need a lot more of now: proof that the GOP won't join Democrats in an anti-Wall Street race to the populist bottom.

THE SIMPLE ANSWER TO HEALTH INSURANCE REFORM

2010-02-08T09:25:00.002-05:00

Liberate insurers to sell across state lines! Natch, the Democrats' proposed "reform" makes this impossible. Insurance maven William Heasley explains.

CUOMO: CREDIT CRIMINAL

2010-02-08T09:15:00.001-05:00

Grandstanding New York attorney general Andrew Cuomo brings charges against Bank of America leaders. But the Wall Street Journal points out that he himself did so much more to blow up the economy in the recent credit crisis:

Before he pursued statewide office in New York, Andrew Cuomo was Secretary of Housing and Urban Development during Bill Clinton's second term. And lest you think his tenure is forgotten, the HUD Web site has an instructive item in its Archives section.
Entitled, "Highlights of HUD Accomplishments 1997-1999," the document chronicles the "accomplishments under the leadership of Secretary Andrew Cuomo, who took office in January 1997."
HUD's Web visitors learn that in 1999 "Secretary Cuomo established new Affordable Housing Goals requiring Fannie Mae and Freddie Mac�two government sponsored enterprises involved in housing finance�to buy $2.4 trillion in mortgages in the next 10 years. This will mean new affordable housing for about 28.1 million low- and moderate-income families. The historic action raised the required percentage of mortgage loans for low- and moderate-income families that the companies must buy from the current 42 percent of their total purchases to a new high of 50 percent�a 19 percent increase�in the year 2001."
It's a sign of Washington's continuing failure to examine its own failures that HUD still views such a policy as an "accomplishment." It's as if the Pentagon described Pearl Harbor as a victory.
We know that in the wake of Mr. Cuomo's agitation, Fannie and Freddie's purchases of subprime loans skyrocketed. Subprime and "liar" loans became loss leaders that eventually caused the two mortgage giants to fail�with taxpayers so far on the hook for $111 billion in losses and perhaps hundreds of billions more to come.
The problem wasn't merely that HUD under Mr. Cuomo was raising the volume of risky loans for which taxpayers were guaranteeing. HUD was also encouraging a dangerous decline in underwriting standards at these government-sponsored enterprises (GSEs). Says former Fannie Mae chief credit officer Edward Pinto, "HUD commissioned much research aimed at forcing the adoption of more flexible lending standards by the GSEs."
In 1999, the Urban Institute published a HUD-commissioned study of Fannie and Freddie's credit guidelines. Among its findings: "Almost all the informants said their opinion of the GSEs has changed for the better since both Fannie Mae and Freddie Mac made substantive alterations to their guidelines and developed new affordable loan products with more flexible underwriting guidelines."
Keep in mind that Mr. Cuomo was doing this Fan and Fred cheerleading even as his colleagues in the Clinton Treasury were publicly raising red flags about their too-rapid expansion. Had Larry Summers, who was then Treasury Secretary, and Republican Paul Ryan, prevailed in their reform attempts, Fan and Fred wouldn't have been able to pile up so much rotten debt and turbocharge the housing boom.
In 2008, Wayne Barrett wrote in detail in the Village Voice about the changes Mr. Cuomo also wrought at the Federal Housing Administration, encouraging bigger loans with smaller down payments.
Mr. Barrett wrote that Mr. Cuomo "made a series of decisions between 1997 and 2001 that gave birth to the country's current crisis. He took actions that�in combination with many other factors�helped plunge Fannie and Freddie into the subprime markets without putting in place the means to monitor their increasingly risky investments. He turned the Federal Housing Administration mortgage program into a sweetheart lender with sky-high loan ceilings and no money down . . . ."
Mr. Barrett summed up Mr. Cuomo's tenure in the Clinton cabinet by noting that "the country will be living with his HUD mistakes, ill- or well-intended, for a long time to come."

WHAT HAPPENS WHEN YOU DON'T SKIP THIRD GRADE

2010-02-05T13:41:00.004-05:00

I just love it when snotty liberal elitists embarrass themselves. Wait till you read this about our old nemesis Dean Baker. From Jim Glass at Scrivener:

The man writes...
More Failed Airthmetic [sic] at the WSJ
It's often said that everyone in Washington is so smart that they skipped directly from 2nd grade to 4th grade. This explains why so many people in top positions don't know third grade arithmetic.
The WSJ gave us another example of this lack of knowledge when it listed Medicare and Social Security as "the U.S.'s biggest budget busters." In fact, those of us who did sit through third grade know that Social Security actually is running an annual surplus. The amount of money it takes in each year on the designated Social Security tax and the interest it collects on its bonds exceeds what it pays out in benefits.
... Social Security is a money loser in the same way as IPOD is for Apple.
First, having looked at the offending WSJ piece -- always the responsible thing to do when one person is ranting about what another supposedly "said" -- we see something strange. The "failed arithmetic" Dean is ranting against is the Administration's, not the WSJ's. Here it is from the story...
Interest payments devour nearly one-tenth of federal revenues ... Spending on Social Security, Medicare and Medicaid consumes an additional 57%. The administration projects that those entitlement programs, as they are known, plus interest on the debt, will absorb 80% of all federal revenues by 2020.
So Dean seems really peeved that the Administration's arithmetic projects these as "budget busters" -- and the WSJ dared report it.
Moreover the year referenced is 2020, not today. Dean didn't notice?
And there are more strange things in this one little post:
..."those of us who did sit through third grade know that Social Security actually is running an annual surplus".
Well, no. Those of us who are alert to facts know that Social Security actually is incurring a shortfall right now. Back when Dean was in third grade they may have projected we'd be running a surplus today, but events have happened since then.

There's much more... read the whole wonderful thing!

ACRIMONY ABOUT ACRONYMS AND ADS

2010-02-04T23:54:00.003-05:00

My DC-insider friend "Mick Danger" muses about the California sentatorial race:

Let�s admit it�s fun to toss a few clever barbs at opponents. May I proceed?
Over at Daily Kos, they seem to have missed the memo that independent voters these days are attracted only to candidates who will deliver on their fiscal conservative promises once in office. On spending issues, you lie, you die.
Carly Fiorina can beat Barbara Boxer. She first needs to take out her Republican primary rival, Tom Campbell. She�s now running this ad.
Daily Kos calls the video �strikingly bizarre.�
Well, more like �strikingly effective� at inventing an acronym for Campbell -- FCINO, a Fiscal Conservative In Name Only � which puts him in a weak position on the biggest (maybe only) issue out there: government spending is completely out of control because incumbent politicians can�t say no. The only solution is to replace the incumbents. The voters are saying, �This time, no pretenders.�
OK, the ad also flubs its attempt to be artsy. Who cares, the message will break through. Like a bullet.
The Daily Kos piles on Carly�s Mad Men:
It's as if a very expensive Senate campaign for an incredibly wealthy woman in the biggest, richest state in the United States of America collectively dropped acid and decided to make an art school, prog rock "concept commercial." Tom Campbell's "pedestal" might be "so high," but not as high as Carlyfornia's new media team.
What�s the thinking behind the bombastic populist pie-throwing at this �incredibly wealthy woman�? Does the left still have that hangover from the �60�s, thinking the country wants to eat the rich? Not in this country. Here, the voters (increasingly, all but the leftists, die-hard liberals and celebrities) are positively starving for people who know how to manage money. Most voters don�t have any real money and that�s exactly why fiscal conservatism is so prevalent. The peeps are pissed at having to pick up the tab because Ted Stevens or Barbara Boxer has some cool new project.
Moreover, this ad by Carly sets a new record in the age-old battle of the sexes. It shows she knows how to manhandle her male opponent, Barack Obama.
Yes, indeed, I mean the President. Want proof? In this item on her campaign website, Carly attacks the President on the budget because it�s his power the voters want to check. Get very nervous, Barbara. Oops, I meant to use that title you�ve earned. The ones your colleagues use: Senator Bitch.
Was that use of the B word over the line? My bad, I guess I got a little Kos-tic.
Senator Boxer, Carly Fiorina will draw you out, wait for you to boil over and then she�ll pause, smile and talk to the voters.

Update... Jameson Campaigne writes,

Carly's campaign now being run by Mike Murphy and the stuff so far is classic Mike.
Not sure it is also Carly "stuff", but who cares if BB goes down?
I too thought it was a great ad. Ads are not supposed to be logical, to reason people into a p.o.v. Most ads would flunk sixth grade logic, if sixth grade logic, the basic fallacies were taught anywhere. They are impressionistic, aimed at the heart, the gut and the posterior ... only when absolutely necessary at the head.

NO Q? NO A!

2010-02-02T16:42:00.002-05:00

DC-insider "Mick Danger" thinks Obama might be afraid of a little friendly fire!

President Obama loves a stage, teleprompter and a crowd.
Questions? Depends upon who�s asking, I guess.
See this gem from today�s Politico:
Q&A WITH DEMOCRATS: President Obama will speak to Senate Democrats on Wednesday morning, and will take their questions as the cameras roll as he did with House Republicans on Friday, Majority Leader Harry Reid's office announced. But unlike at the rumble with the GOP, Obama is expected to take only a handful of questions.

Update... William Heasley commends our attention to this -- a website devoted to trinkets and trash commemorating TOTUS -- Readership You Can Believe In!

TAX-SIMPLIFICATION, OBAMA-STYLE

2010-02-01T01:25:00.001-05:00

Thanks to Dave Duval, via the Wine Commonsewer.