Frank Wolf (R-VA 10) has introduced a bill called the "Bring Jobs Back to America Act."
Jobs are a top priority and Frank Wolf's bill will actually make things worse.
Here are some concerns that his bill does not address:
1. It provides a subsidy of $71,000 per job, but there is no provision in the bill for how long the jobs have to last.
In other words, a company could set up a factory with jobs that pay $20,000 and operate it for one year before shutting it down, and still receive $71,000 per job, which means they are tricking the government -- or the taxpayers -- out of $51,000 per job.
Frank Wolf is apparently either an idiot (if he didn't think this part through) or corrupt (if he did).
2. This bill rewards companies for bringing jobs back that were already outsourced. So a company that already did its patriotic duty by keeping jobs here gets no benefit.
In other words, it's like a version of affirmative action that only helps former criminals, and doesn't give anything to law-abiding citizens.
Again, Frank Wolf is apparently either an idiot (if he didn't think this part through) or corrupt (if he did).
I am a loyal Republican but Frank Wolf embarrasses me. I look forward to his NOT being in Congress after 2012. He is already past the Biblical three score and ten years old, and it's probably long past his time to retire. Perhaps someone should run against him in the 2012 primary. Not me, though -- I've already got *my* sights on Gerry Connolly's seat!
I have no problems with any proposed tax cut, including credits and deductions, with three minor, common-sense conditions.
First, the cuts should be fair, i.e. equal, rather than being "targeted" to only certain specific firms or industries. "Targeted" cuts are both unfair and also wasteful.
Second, there should be no *subsidies* or other benefits which are greater than the cost of the action; otherwise we are paying for businesses to do things that waste money.
Third, any business -- or other organization -- which receives more money from the government than it pays in taxes should be prohibited from lobbying or making political contributions, even indirect "issue advertising."
(I also think that any individual who receives more from the government than *they* pay in taxes should not be allowed to vote -- not my idea, it goes back at least 150 years to John Stuart Mill.)
As far as immigration policy goes, I want to have a policy which encourages smart, honest, hard-working people to emigrate to America, and which discourages stupid, dishonest, and lazy people from coming (or staying) here.
One policy that would do that is to prohibit any government benefits (such as welfare, Social Security, education, or health care) to anyone except U.S. citizens.
Since naturalization requires being in the country for at least five years, this means they would have to support themselves for five years in a row.
I think that's a pretty good indication that they didn't want to come here to leech off our welfare system.
Of course anyone who tried to get benefits should have to prove citizenship, and be deported if they couldn't.
This means that someone who needed emergency medical care would receive it, but be deported as soon as it was medically safe.
I'm also in favor of *increasing* immigration of skilled, educated workers, i.e. those with a graduate or professional degree.
I'm also in favor of requiring each immigrant to post a bond which would cover the cost of a return ticket and other expenses for deportation.
Tuesday, December 28, 2010
Red State Diary
I just posted the following at RedState:
I am a financial conservative. I agree that this is an issue that 70% of the voters will support. Regardless of how you feel about social issues, it is a good idea for all of us to work together on economic issues. Even in the worst possible case, wouldn't you rather succeed on only one set of issues than not succeed on anything at all?
I am also a social conservative, and I think we can find common ground on social issues as well. Even the most libertine libertarian agrees that we should not have welfare benefits for drug addicts, unwed mothers, or lazy hippies (or anyone else). Without such programs there would be no need to have laws to protect the family or punish promiscuity -- it will happen naturally, as those who behave badly end up homeless and starving, or turning to churches for charity.
Libertarians also want no anti-discrimination laws or other special privileges for homosexuals (or anyone else). So even if you spurn Christ's teachings (1 Corinthians 5:12, Matthew 7, Matthew 9:10-13, Matthew 13:27-30) and think it's a good idea to have laws against homosexuality, and against heterosexual adultery and fornication, and against divorce . . . on a practical level those are not going to happen. So I suggest settling for a "level playing field" and letting God sort things out.
Sunday, November 07, 2010
Modest Proposals: Agenda for the 112th Congress
Social Security, Medicare, Defense, Interest, Welfare, Education, Other.
Useful links:
"A Modest Agenda for a New GOP Congress" by David H. Horwich
"How the New Congress Can Roll Back Obama’s Agenda"
"Republicans won the midterm elections. Now can they survive?"
"Top 10 challenges John Boehner will face as Speaker of the House"
By Bob Cusack
Thousands of Democrats to be jobless in Washington
By Al Kamen
"The Six Arguments You Meet in Political Hell"
"How to Cut $343 Billion from the Federal Budget"
"What Republicans Need to Do Now"
"Conservatives Treat a Foe Like a Foe"
"The Globe discovers that Massachusetts has shot itself in the foot…AGAIN"
http://datechguy.wordpress.com/2010/11/12/the-globe-discovers-that-massachusetts-has-shot-itself-in-the-foot-again/
1. Replace the current tax system with either a flat-rate income tax or a national sales tax, or some combination. This should replace both individual and corporate income tax, capital gains tax, and the Alternative Minimum Tax. A possible tax rate would be 20% or 25%.
It's not necessary to make this revenue-neutral because "starving the beast" doesn't work, and apparently raising taxes makes people more opposed to government spending!
2. Eliminate all earmarks, and all discretionary spending. The first targets should be corporate welfare and the very next targets should be all spending in "blue" areas, i.e. those which voted Democrat. Once that happens, we can expect bipartisan support for eliminating all spending in "red" areas.
Perhaps we can start by using "reverse earmarking": bills will specify that no funds for their programs can be spent in certain areas. When Democrats are faced with a choice between eliminating a program, or keeping it but having it only go to Republican areas, I expect they will see the light.
We can certainly keep government programs such as interstate highways and other transportation, national parks, the United States Postal Service, PBS and anything else, simply by making them self-supporting. Highways will have to be funded by tolls, license fees, and gasoline taxes; parks will be funded by ticket sales and donations; the USPS and PBS will simply have their subsidies eliminated.
3. Replace all current welfare and other social programs (other than Social Security, Medicare, and Medicaid) with a flat-rate demogrant of, say, $10,000 per person per year.
4. Replace Medicare and Medicaid with a comprehensive universal system that gives each person a voucher for whatever it would cost the government to give them basic health care plus catastrophic health insurance from Medicare/Medicaid, but allow people to use the voucher for private insurance, including HSAs that can roll over instead of being literally stolen at the end of each year. To clarify, people with preexisting conditions or other issues which cost more will get bigger vouchers, because the amount of the voucher will be whatever it would cost the government to provide Medicare/Medicaid for that particular person.
This could be funded out of the $10,000 per person demogrant.
5. Replace
http://www.johntreed.com/growth.html
http://www.johntreed.com/Reedhealthcare.html
Useful links:
"A Modest Agenda for a New GOP Congress" by David H. Horwich
"How the New Congress Can Roll Back Obama’s Agenda"
"Republicans won the midterm elections. Now can they survive?"
"Top 10 challenges John Boehner will face as Speaker of the House"
By Bob Cusack
Thousands of Democrats to be jobless in Washington
By Al Kamen
"The Six Arguments You Meet in Political Hell"
"How to Cut $343 Billion from the Federal Budget"
"What Republicans Need to Do Now"
"Conservatives Treat a Foe Like a Foe"
"The Globe discovers that Massachusetts has shot itself in the foot…AGAIN"
http://datechguy.wordpress.com/2010/11/12/the-globe-discovers-that-massachusetts-has-shot-itself-in-the-foot-again/
1. Replace the current tax system with either a flat-rate income tax or a national sales tax, or some combination. This should replace both individual and corporate income tax, capital gains tax, and the Alternative Minimum Tax. A possible tax rate would be 20% or 25%.
It's not necessary to make this revenue-neutral because "starving the beast" doesn't work, and apparently raising taxes makes people more opposed to government spending!
2. Eliminate all earmarks, and all discretionary spending. The first targets should be corporate welfare and the very next targets should be all spending in "blue" areas, i.e. those which voted Democrat. Once that happens, we can expect bipartisan support for eliminating all spending in "red" areas.
Perhaps we can start by using "reverse earmarking": bills will specify that no funds for their programs can be spent in certain areas. When Democrats are faced with a choice between eliminating a program, or keeping it but having it only go to Republican areas, I expect they will see the light.
We can certainly keep government programs such as interstate highways and other transportation, national parks, the United States Postal Service, PBS and anything else, simply by making them self-supporting. Highways will have to be funded by tolls, license fees, and gasoline taxes; parks will be funded by ticket sales and donations; the USPS and PBS will simply have their subsidies eliminated.
3. Replace all current welfare and other social programs (other than Social Security, Medicare, and Medicaid) with a flat-rate demogrant of, say, $10,000 per person per year.
4. Replace Medicare and Medicaid with a comprehensive universal system that gives each person a voucher for whatever it would cost the government to give them basic health care plus catastrophic health insurance from Medicare/Medicaid, but allow people to use the voucher for private insurance, including HSAs that can roll over instead of being literally stolen at the end of each year. To clarify, people with preexisting conditions or other issues which cost more will get bigger vouchers, because the amount of the voucher will be whatever it would cost the government to provide Medicare/Medicaid for that particular person.
This could be funded out of the $10,000 per person demogrant.
5. Replace
http://www.johntreed.com/growth.html
http://www.johntreed.com/Reedhealthcare.html
Saturday, November 06, 2010
Nothing But Class
I just filled out a survey on NBC.com. When asked what I disliked about their website, I replied, truthfully, that
It is very difficult to find a specific clip or episode. Your "filing system" is a horrible mess. Many times I have clicked on a link for a clip or episode, or something else related to a show (such as cast biography), and gotten something completely different. Sometimes I clicked on the link for a show and been taken to a completely different show. This happened so frequently that I COMPLETELY QUIT USING YOUR WEBSITE EXCEPT WHEN I WAS DIRECTED TO IT FROM AN OUTSIDE LINK. THIS IS A BAD THING FOR NBC. BAD JOB! I never go to your website except on the rare occasions when there is a link to it within an article that I read -- and even when there is a link to your site, I usually don't bother to click on it if I see it goes to NBC.com. By the way, since I no longer use a regular television set, this means the only time I ever see any of your shows is on Hulu. Congratulations: from my perspective it would be hard to do a worse job if you were actually trying to do badly. In fact, it seems to be happening right now with the clip that I want to see, which is the link to "Saturday Night Live - Countdown with Keith Olbermann" on http://www.mediaite.com/tv/the-two-underlying-reasons-keith-olbermann-was-suspended-now/
Sunday, October 24, 2010
"Morals" Laws are Immoral
I mean laws against *vices* (a/k/a victimless crimes, a/k/a “morals laws”) such as intoxication (alcohol and/or drugs), masturbation, fornication, sodomy, and gluttony.
Murder, theft, assault and trespass are all examples of real crimes. They are not examples of *subjective* or “personal” morality because literally no one wants to be the victim of such acts — even those criminals who want to commit them on others. Therefore, enforcing those laws is legitimate.
Murder, theft, assault and trespass are all examples of real crimes. They are not examples of *subjective* or “personal” morality because literally no one wants to be the victim of such acts — even those criminals who want to commit them on others. Therefore, enforcing those laws is legitimate.
Sunday, October 17, 2010
Meet the New Boss, Same as the Old Boss?
"The Risk of Post-Election Republican Betrayal and What We Should Do about It."
I am a "public choice" economist, i.e. someone who analyzes politics using the theories and techniques of economics.
Bottom line: I believe that we get whatever policies the average voter wants, or rather whatever policies that special interests want and the average voter is willing to put up with.
I am a "public choice" economist, i.e. someone who analyzes politics using the theories and techniques of economics.
Bottom line: I believe that we get whatever policies the average voter wants, or rather whatever policies that special interests want and the average voter is willing to put up with.
Sunday, July 04, 2010
Modest Proposals: A Gentlemen's Agreement on the Supreme Court
[Dogbert has been nominated to the Supreme Court:]
Senator: Do you have any opinions on the right to privacy?
Dogbert: No. In fact, I never formed an important opinion in my entire life.
Senator: You must think we're idiots!
Dogbert: Okay, I've formed one opinion, but that's all.
I personally would refuse to confirm a nominee who didn't give clear answers on how they would rule in various hypothetical cases. Furthermore, I would specifically point out their evasive answers meant they were either dishonest or incompetent, probably the former, and that's why I didn't consider them qualified.
On the other hand, I would not have any problem confirming a nominee whose opinions I disagreed with. Like many of the posters on The Volokh Conspiracy I believe that the Senate should give deference to the President's nominees.
One way of handling this would be to have a rule -- not a law but a "gentlemen's agreement" -- that each President is entitled to nominate one new justice to the Supreme Court. In other words, rather than a lifetime appointment, being a justice of the Supreme Court should be the equivalent of a 36-year term.
Like other "constitutional bargains" -- this is something we study in economics, specifically in my favorite field, public choice -- the idea behind it is that it treats both sides equally and neither of them knows whether they will be benefited or harmed by it.
If this were the case, i.e. if each of the last nine presidents had appointed one justice, it would be:
Obama (D)
Bush (R)
Bush (R)
Clinton (D)
Clinton (D)
Bush (R)
Reagan (R)
Reagan (R)
Carter (D)
In other words, the court would be divided between five Republican justices and four Democratic ones.
Senator: Do you have any opinions on the right to privacy?
Dogbert: No. In fact, I never formed an important opinion in my entire life.
Senator: You must think we're idiots!
Dogbert: Okay, I've formed one opinion, but that's all.
I personally would refuse to confirm a nominee who didn't give clear answers on how they would rule in various hypothetical cases. Furthermore, I would specifically point out their evasive answers meant they were either dishonest or incompetent, probably the former, and that's why I didn't consider them qualified.
On the other hand, I would not have any problem confirming a nominee whose opinions I disagreed with. Like many of the posters on The Volokh Conspiracy I believe that the Senate should give deference to the President's nominees.
One way of handling this would be to have a rule -- not a law but a "gentlemen's agreement" -- that each President is entitled to nominate one new justice to the Supreme Court. In other words, rather than a lifetime appointment, being a justice of the Supreme Court should be the equivalent of a 36-year term.
Like other "constitutional bargains" -- this is something we study in economics, specifically in my favorite field, public choice -- the idea behind it is that it treats both sides equally and neither of them knows whether they will be benefited or harmed by it.
If this were the case, i.e. if each of the last nine presidents had appointed one justice, it would be:
Obama (D)
Bush (R)
Bush (R)
Clinton (D)
Clinton (D)
Bush (R)
Reagan (R)
Reagan (R)
Carter (D)
In other words, the court would be divided between five Republican justices and four Democratic ones.
Monday, June 07, 2010
Sunday, June 06, 2010
Will Opine For Food
I'm still working on a list of topics for papers I want to submit for publication.
One set is the list of "interfaces" between political science and economics, which Bryan Caplan listed in his ECON 854 course.
Also these:
A survey to measure the Mueller Effect.
An analysis of the concept of "collective intelligence" in public- and private-sector organizations.
What *should* be done (and have been done) concerning the BP oil spill.
A critique of Rand Paul's gaffe about the 1964 Civil Rights Act (from a perspective very close to Richard Epstein's).
Why it's actually beneficial that Islamofascists are challenging some of our most fundamental concepts like religious tolerance.
A response to Is the Welfare State Justified? by Daniel Shapiro.
A critique of so-called "libertarian paternalism."
An analysis of the economic-efficiency (social-welfare) effects of the so-called "Neutrality" or "Generality" rule.
A response to Dan Klein's criticism of the social welfare function as "loose, vague, and indeterminate."
A response to Bryan Caplan's criticism of Pareto optimality (possibly combined with the previous topic). Both of these would build on the defenses of economic efficiency as a standard, made by David Friedman and Richard Epstein.
Something else that I forgot.
One set is the list of "interfaces" between political science and economics, which Bryan Caplan listed in his ECON 854 course.
Also these:
A survey to measure the Mueller Effect.
An analysis of the concept of "collective intelligence" in public- and private-sector organizations.
What *should* be done (and have been done) concerning the BP oil spill.
A critique of Rand Paul's gaffe about the 1964 Civil Rights Act (from a perspective very close to Richard Epstein's).
Why it's actually beneficial that Islamofascists are challenging some of our most fundamental concepts like religious tolerance.
A response to Is the Welfare State Justified? by Daniel Shapiro.
A critique of so-called "libertarian paternalism."
An analysis of the economic-efficiency (social-welfare) effects of the so-called "Neutrality" or "Generality" rule.
A response to Dan Klein's criticism of the social welfare function as "loose, vague, and indeterminate."
A response to Bryan Caplan's criticism of Pareto optimality (possibly combined with the previous topic). Both of these would build on the defenses of economic efficiency as a standard, made by David Friedman and Richard Epstein.
Something else that I forgot.
Friday, April 09, 2010
How To Solve The Financial Crisis
Someone asked me to recommend him some academic economics journal articles about the causes of the Financial Crisis. I demurred, and explained why:
Mainstream economics, and at least 80% of all economics, is "free-market" in the sense that it understands and approves of the free market, and only wants to interfere with it when it will actually do some good for society as a whole, and wants the intervention to be as small and as market-based as possible.
So it would only support things like a Negative Income Tax (which Milton Friedman invented), or school vouchers (which Friedman also supported), and other sorts of vouchers.
To clarify even more: The overwhelming majority of economists dislike the vast majority of current government programs, even though they are moderate-liberal Democrats themselves. (For the question of why they still support the Democrats even though they oppose their programs, I refer you to Professor Klein, whose class I'm typing this in, and also Arnold Kling. Kling says it's "culture" or "psychological identification" -- they're more comfortable with fellow-intellectuals that they disagree with, rather than rednecks that they despise. They'd rather belong to the party of Soft Heads than the party of Hard Hearts.)
So just about *any* economics journal article would be acceptable.
Second, to quote Nobel Prize-winner George Stigler, "The typical article in a professional journal is unrelated to public policy -- and often apparently unrelated to anything in reality." So from that point of view *no* journal article would be acceptable. Use blogs, or articles in "popular journals," e.g. Atlantic or The Economist, instead.
Third, people -- even experts who are generally within the same economic doctrine -- are still arguing about what went wrong, never mind how to fix it.
Bottom line: Google "financial" and "crisis" at site:econlog.econlib.org
Here's my take on what happened:
1. For a variety of reasons, some due to human miscalculation and some due to government intervention, we had a housing bubble: prices rose above a reasonable level, people kept buying anyway, and people overextended themselves buying housing on credit (zero-down mortgages).
Clear definition of a reasonable level: If bonds are paying 3% per year (33 x earnings) it's not reasonable to pay 50 x (expected) earnings for stocks. It makes no sense! It might make sense for a specific stock if you thought its expected earnings were going to skyrocket, or if you thought everyone else was about to mistakenly think its expected earnings were going to skyrocket, but not to do it across the board.
2. Eventually the bubble burst and housing prices dropped drastically. Therefore some people started defaulting on their mortgages (because they weren't worth keeping -- the debt was higher than the new value of the house) and even the mortgages that didn't default (yet) had to be re-valued and banks suddenly found their collateral for loans had disappeared and their balance sheets were horrible. For a variety of reasons, partly because the housing bubble had so many participants and partly because the risk was "spread around" by "bundling" mortgages, this meant a *lot* of banks and other financial houses were hit.
3. When the housing bubble burst, it also affected people who were relatively solvent, by dropping the value of their houses; and this affected the stock market. People *were* buying stocks by using the equity in their homes, and felt fine about it; now the equity disappeared -- it was just as if they found out their rich uncle who previously said he would leave all his wealth to them had suddenly decided to disinherit them -- started selling off stocks because they wanted cash in hand. This drove the value of stocks down, which caused even more panic selling.
4. Therefore, not only were people defaulting on mortgages but there were also people whose lives were unaffected by anything physical, anything that could be seen by watching a silent videotape of Before versus After, who felt poor and/or panicked. People who still had jobs and could meet their mortgage payments (same as before) and pay their groceries and utility bills (same as before) because all their paper wealth (the equity of their houses, and the value of their stock portfolios) had evaporated. (By the way, one extremely important thing to understand is that my vampire RPG character, Mr Grey a/k/a Caliban, lost 3/4 of his wealth in the crisis, because almost all of his wealth was in stocks and real estate -- I had established the basics of his investments when I created him back in 2002!)
5. Also, businesses were affected because capital dried up. People saved/invested less because they didn't have paper wealth, so they didn't have as much money to put into banks. (Previously, they had been getting cash by refinancing their houses, or by selling them, at inflated prices, or from the stock market, and then putting it into banks or stocks or more real estate.) And so banks didn't have as much cash on hand *and* they couldn't make any new loans anyway, because they were overextended because the value of the collateral on all their previous loans was gone. It was exactly as if tornadoes had devastated all the houses so there wasn't any collateral value left.
6. Banks reacted by drastically reducing the amount of new loans they made. Partly they raised their interest rates but mostly they just became very, very cautious; they wanted to see huge amounts of collateral before they would make a loan for anything, either homes or business loans or automobile loans or anything else. This helped cause a *real* recession (decline in employment and production and incomes, which then causes more decline, etc.) in addition to the crash of *paper* wealth (loss of value of real estate and stocks).
7. IMO the proper response by government would have been to say "Nobody is too big to fail; when you play with fire, you gonna get burn'; when you take the profits you gotta take the losses as well. We have guaranteed people's bank accounts up to $100,000 per person if they failed; we will make a special temporary increase up to $250,000 or $500,000 for the next year or two to cushion the blow so people aren't hurt *too* badly. We will also increase unemployment benefits to help those who have temporarily lost their jobs due to the recession. We will also reform the welfare system" -- hey, I'm like Rahm Emmanuel, I never want to let a good crisis go to waste, and reforming welfare to be more like a Negative Income Tax / Guaranteed Income system is something we should have done 40 years ago -- "and eliminate corporate welfare and other subsidies" -- as I always say, I don't know if we need more spending the less-fortunate but we definitely need less spending on the more-fortunate -- "and use all those savings to cut the deficit, which will boost the economy while bringing us *out* of debt instead of further into it."
8. Unfortunately, the government decided, by the most amazing coincidence, to do something to help out the people and groups who were politically powerful and well-connected. So they decided to bail out Wall Street bankers and brokers, and also the people who defaulted on their mortgages that they should never have gotten in the first place, and the non-Wall Street bankers who should never have given those mortgages in the first place -- in other words, gangs of criminals who ripped off hard-working taxpayers. I have some sympathy for poor, uneducated people who lied on their mortgage documents, but no sympathy for white-collar criminal "banksters" who told them to do it.
Mainstream economics, and at least 80% of all economics, is "free-market" in the sense that it understands and approves of the free market, and only wants to interfere with it when it will actually do some good for society as a whole, and wants the intervention to be as small and as market-based as possible.
So it would only support things like a Negative Income Tax (which Milton Friedman invented), or school vouchers (which Friedman also supported), and other sorts of vouchers.
To clarify even more: The overwhelming majority of economists dislike the vast majority of current government programs, even though they are moderate-liberal Democrats themselves. (For the question of why they still support the Democrats even though they oppose their programs, I refer you to Professor Klein, whose class I'm typing this in, and also Arnold Kling. Kling says it's "culture" or "psychological identification" -- they're more comfortable with fellow-intellectuals that they disagree with, rather than rednecks that they despise. They'd rather belong to the party of Soft Heads than the party of Hard Hearts.)
So just about *any* economics journal article would be acceptable.
Second, to quote Nobel Prize-winner George Stigler, "The typical article in a professional journal is unrelated to public policy -- and often apparently unrelated to anything in reality." So from that point of view *no* journal article would be acceptable. Use blogs, or articles in "popular journals," e.g. Atlantic or The Economist, instead.
Third, people -- even experts who are generally within the same economic doctrine -- are still arguing about what went wrong, never mind how to fix it.
Bottom line: Google "financial" and "crisis" at site:econlog.econlib.org
Here's my take on what happened:
1. For a variety of reasons, some due to human miscalculation and some due to government intervention, we had a housing bubble: prices rose above a reasonable level, people kept buying anyway, and people overextended themselves buying housing on credit (zero-down mortgages).
Clear definition of a reasonable level: If bonds are paying 3% per year (33 x earnings) it's not reasonable to pay 50 x (expected) earnings for stocks. It makes no sense! It might make sense for a specific stock if you thought its expected earnings were going to skyrocket, or if you thought everyone else was about to mistakenly think its expected earnings were going to skyrocket, but not to do it across the board.
2. Eventually the bubble burst and housing prices dropped drastically. Therefore some people started defaulting on their mortgages (because they weren't worth keeping -- the debt was higher than the new value of the house) and even the mortgages that didn't default (yet) had to be re-valued and banks suddenly found their collateral for loans had disappeared and their balance sheets were horrible. For a variety of reasons, partly because the housing bubble had so many participants and partly because the risk was "spread around" by "bundling" mortgages, this meant a *lot* of banks and other financial houses were hit.
3. When the housing bubble burst, it also affected people who were relatively solvent, by dropping the value of their houses; and this affected the stock market. People *were* buying stocks by using the equity in their homes, and felt fine about it; now the equity disappeared -- it was just as if they found out their rich uncle who previously said he would leave all his wealth to them had suddenly decided to disinherit them -- started selling off stocks because they wanted cash in hand. This drove the value of stocks down, which caused even more panic selling.
4. Therefore, not only were people defaulting on mortgages but there were also people whose lives were unaffected by anything physical, anything that could be seen by watching a silent videotape of Before versus After, who felt poor and/or panicked. People who still had jobs and could meet their mortgage payments (same as before) and pay their groceries and utility bills (same as before) because all their paper wealth (the equity of their houses, and the value of their stock portfolios) had evaporated. (By the way, one extremely important thing to understand is that my vampire RPG character, Mr Grey a/k/a Caliban, lost 3/4 of his wealth in the crisis, because almost all of his wealth was in stocks and real estate -- I had established the basics of his investments when I created him back in 2002!)
5. Also, businesses were affected because capital dried up. People saved/invested less because they didn't have paper wealth, so they didn't have as much money to put into banks. (Previously, they had been getting cash by refinancing their houses, or by selling them, at inflated prices, or from the stock market, and then putting it into banks or stocks or more real estate.) And so banks didn't have as much cash on hand *and* they couldn't make any new loans anyway, because they were overextended because the value of the collateral on all their previous loans was gone. It was exactly as if tornadoes had devastated all the houses so there wasn't any collateral value left.
6. Banks reacted by drastically reducing the amount of new loans they made. Partly they raised their interest rates but mostly they just became very, very cautious; they wanted to see huge amounts of collateral before they would make a loan for anything, either homes or business loans or automobile loans or anything else. This helped cause a *real* recession (decline in employment and production and incomes, which then causes more decline, etc.) in addition to the crash of *paper* wealth (loss of value of real estate and stocks).
7. IMO the proper response by government would have been to say "Nobody is too big to fail; when you play with fire, you gonna get burn'; when you take the profits you gotta take the losses as well. We have guaranteed people's bank accounts up to $100,000 per person if they failed; we will make a special temporary increase up to $250,000 or $500,000 for the next year or two to cushion the blow so people aren't hurt *too* badly. We will also increase unemployment benefits to help those who have temporarily lost their jobs due to the recession. We will also reform the welfare system" -- hey, I'm like Rahm Emmanuel, I never want to let a good crisis go to waste, and reforming welfare to be more like a Negative Income Tax / Guaranteed Income system is something we should have done 40 years ago -- "and eliminate corporate welfare and other subsidies" -- as I always say, I don't know if we need more spending the less-fortunate but we definitely need less spending on the more-fortunate -- "and use all those savings to cut the deficit, which will boost the economy while bringing us *out* of debt instead of further into it."
8. Unfortunately, the government decided, by the most amazing coincidence, to do something to help out the people and groups who were politically powerful and well-connected. So they decided to bail out Wall Street bankers and brokers, and also the people who defaulted on their mortgages that they should never have gotten in the first place, and the non-Wall Street bankers who should never have given those mortgages in the first place -- in other words, gangs of criminals who ripped off hard-working taxpayers. I have some sympathy for poor, uneducated people who lied on their mortgage documents, but no sympathy for white-collar criminal "banksters" who told them to do it.
Thursday, February 04, 2010
In the Seattle Daily Weekly: Gay, Mentally Challenged Biracial Male Cheerleader Claims Discrimination
Well, I for one am proud to live in a country where a guy like that can be elected President.
After all, Obama is biracial; Jimmy Carter is mentally-challenged; Bill Clinton was a male cheerleader.
Well, I for one am proud to live in a country where a guy like that can be elected President.
After all, Obama is biracial; Jimmy Carter is mentally-challenged; Bill Clinton was a male cheerleader.
Saturday, January 23, 2010
Just Posted on Vanity Fair
If the Supremes had made the decision Mr Rollins wanted, it means (as Ilya Somin points out) that *unions* would have been banned from making political contributions, and (as Matt Welch points out) *nonprofit* corporations would have been banned from making political statements.
Would Mr Rollins have approved if MoveOn.org’s Campaign to Defend America had been blocked by George W. Bush’s Federal Elections Commission from broadcasting a documentary called “McCain: The Movie” during the 2008 election?
Because that's exactly what the FCC tried to do with Citizens United, and apparently he supports that decision.
Or does he only want free speech rights for those who agree with him? Is he a fool or a hypocrite?
[Update:] I apologize for calling Mr Rollins a fool or a hypocrite; I do think his *opinion* is either foolish or unjust. If organized groups are banned from politics then only individuals will be able to make political statements and contributions -- and that gives a big advantage to rich individuals. It's easier and simpler to get $1 million from one donor than to get $1000 from a thousand or $10 from ten thousand. Organized groups like PACs and unions help coordinate the contributions of the middle- and working-classes so they can help balance those of the rich. And I repeat that if we allow this for progressive organizations it is unfair to deny equal rights to reactionary ones.
Would Mr Rollins have approved if MoveOn.org’s Campaign to Defend America had been blocked by George W. Bush’s Federal Elections Commission from broadcasting a documentary called “McCain: The Movie” during the 2008 election?
Because that's exactly what the FCC tried to do with Citizens United, and apparently he supports that decision.
Or does he only want free speech rights for those who agree with him? Is he a fool or a hypocrite?
[Update:] I apologize for calling Mr Rollins a fool or a hypocrite; I do think his *opinion* is either foolish or unjust. If organized groups are banned from politics then only individuals will be able to make political statements and contributions -- and that gives a big advantage to rich individuals. It's easier and simpler to get $1 million from one donor than to get $1000 from a thousand or $10 from ten thousand. Organized groups like PACs and unions help coordinate the contributions of the middle- and working-classes so they can help balance those of the rich. And I repeat that if we allow this for progressive organizations it is unfair to deny equal rights to reactionary ones.
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