September 27, 2007

"Silence in Syria, Panic in Iran"

According to Instapundit, the September 6 Israeli raid on Syria may be panicking Iran.

I too have made that small hop of the imagination. Heh.

September 22, 2007

Sarah Palin

IMO Alaska's Governor Palin might fill out into presidential timber along Reaganesque lines.

There's a blog pushing her for VP, but Glenn Reynolds says she should run for Ted Stevens' seat.

Viewing Palin as a potential POTUS, I have doubts about both suggestions. Re VP: most of the recent Vice Presidents who became President did not have successful administrations. Re Instapundit: Palin needs more than two years of executive experience before running for President; furthermore, the modern Senate has not been a viable launching pad for presidencies (though Clinton may change that).

On the other hand, national-level experience would help Palin if she seeks higher office. If the GOP had a clue, they would put Palin on their presidential farm team and help her acquire such experience.

Of course, if the GOP had a clue they wouldn't have lost Congress.

September 20, 2007

Military Rule: A Modest Proposal

So the mortgage mess has put us at risk of recession or worse, and what does the establishment want? Cheap labor and cheap votes, of course!

According to the LA Times, immigration legislation is back:
The first to come up is expected to be the "Dream Act," a bill championed by Sen. Richard J. Durbin (D-Ill.) that would give conditional legal status to immigrants brought to the U.S. at a young age.


Durbin plans to attach the bill as an amendment to a defense funding measure scheduled to come before the Senate today, his staff said.
Durbin is putting this kind of amendment onto a military bill during wartime.

The Roman Republic used to appoint dictators to deal with emergencies. Eventually this practice led to autocracy, but it was viable for a long time. Maybe we need a Constitutional amendment authorizing the military to take power for a limited period, e.g. the balance of a presidential term, if in their judgment the security of the nation is at risk.

The foregoing is meant as brainstorming, not as a serious proposal. However, something is very wrong with most or all of our civilian establishments: political, business, academic...

September 16, 2007

The Boomers

It is quite possible that the baby boom generation is the single worst generation of Americans that this country has ever produced.
There was considerable overlap between the subsets of the Great Generation respectively characterized as 'the best' and 'the brightest'. The boomers changed that.

I fear our best are no longer our brightest and our brightest sneer at our best.


The New England Patriots have been marketed as the epitome of family wholesomeness. To some extent I willingly suspended my capacity for disbelief and bought into the story.

I'm now a New Englander, but the reports about Belichick's somewhat messy divorce and Brady's kid didn't sit well with my Midwestern roots. Of course the full stories are not known, and my lack of approval is not the same as condemnation.

Then the taping thing--it's not worth the time to dig out links--came up and my attention was pulled back to the team. As the affair grew, I found the same link about the NFL commissioner as this poster did, and reached the same conlusion: Goodell's objectivity is in question and he should have recused himself from the affair. This was even before the Patriots' confiscated film was leaked to the media.

NFL football is a game, played for overly high stakes. To be good at the game requires a variant of martial virtue, but it does not necessarily make one admirable across the board. After my spasm of pro-Patriots indignation, I'm going to resume my resolution to ignore sports and focus on my business.

September 11, 2007


Never forget.

September 7, 2007

I was tempted to soften on Bush. Then he put himself back in the news. (#2 & #2.5)

From the Washington Times (HT: Instapundit):
Congressional Democrats are trying to undermine U.S. Army Gen. David H. Petraeus' credibility before he delivers a report on the Iraq war next week, saying the general is a mouthpiece for President Bush and his findings can't be trusted.

"The Bush report?" Senate Majority Whip Richard J. Durbin said when asked about the upcoming report from Gen. Petraeus, U.S. commander in Iraq.

"We know what is going to be in it. It's clear. I think the president's trip over to Iraq makes it very obvious," the Illinois Democrat said. "I expect the Bush report to say, 'The surge is working. Let's have more of the same.'"
The timing of Bush's Iraq visit is partisan and provocative. Maybe he doesn't care because he has the votes he needs--but if the day comes when he needs every vote he can get, this occasion will not be forgotten.

The Democrats' statements are reprehensible, but it is Bush who has exposed the military, i.e. Petraeus, as a target for political mudslinging.

Addendum. From Iraq, on to Australia and the APEC meeting:
"Thank you for being such a fine host for the OPEC summit," Mr. Bush said to Australian Prime Minister John Howard.
Mr. Bush quickly corrected himself. "APEC summit," he said forcefully, joking that the confusion was because Howard had invited him to the OPEC summit next year (though neither Australia nor the United States is an OPEC member).

The president's next goof went uncorrected, at least immediately. Talking about Howard's visit to Iraq last year to thank his country's soldiers serving there, Mr. Bush referred to them as "Austrian troops" - though the official text released by the White House and posted on fixed it to "Australian."

After his speech, Mr. Bush confidently headed out - the wrong way.

He strode away from the lectern on a path that would have sent him over a steep drop. Howard and others saved him, redirecting the president to center stage, where there were steps leading down to the floor of the theater.

The audience remained quiet throughout the president's remarks, applauding only when he was finished.
Did the audience applaud because they saw Bush heading toward the dropoff?

Meanwhile, the Sydney Morning Herald notes:
What an irony. When the leader of the free world comes to town, the first casualty is freedom. Parts of the city look like a war zone, wreathed in five kilometres of fencing wire. Helicopters buzz, jumpy police bark at motorists. Riot cars tear through the city; the new water cannon lies in wait. Some city workers are forced to shuffle like prisoners through a series of chook runs. Laws are passed to give police extraordinary powers to search, detain, confiscate. There is a fenced-off "restricted" zone and a wider "security" zone.
...But the clampdown on civil liberties is so over the top, the restrictions extending so far from the key venues, that some believe the Premier, Morris Iemma, has an ulterior motive in mind - to annoy the citizens of Sydney so much they will vent their anger on John Howard at the federal election.
Even if the qualifier is true, the use of his visit for partisan games is itself an indication that the American president is not respected.

September 2, 2007

Toward a Modest Proposal about the Mortgage Mess

Bernanke speaks:
the mortgage market has become more like the frictionless financial market of the textbook, with fewer institutional or regulatory barriers to efficient operation. In one important respect, however, that characterization is not entirely accurate. A key function of efficient capital markets is to overcome problems of information and incentives in the extension of credit. The traditional model of mortgage markets, based on portfolio lending, solved these problems in a straightforward way: Because banks and thrifts kept the loans they made on their own books, they had strong incentives to underwrite carefully and to invest in gathering information about borrowers and communities. In contrast, when most loans are securitized and originators have little financial or reputational capital at risk, the danger exists that the originators of loans will be less diligent.
And this holds even more for derivatives.

The big financial houses that make big money from peddling toxic financial waste as portfolio vitamins don't want regulation--but if they must endure regulation, they want a lot of it because the costs will overburden their nascent competitors. (To rectify the financial system and economy, more lawyers should get paid more money...yeah, that'll do it.)

If sunlight is the best disinfectant, the first thing to do is to get all these instruments into the sunlight. After they are assessed, society can assess how the markets should be regulated in order to keep them reasonably free and efficient.

A very rough thought follows. For starters every piece of US-traded paper--CDO, CMO, OTC derivative, etc.--should be posted on a publicly accessible central database together with the most recent transaction price and rating. Confidentiality of buyers and sellers should be respected, but the rating agency/agencies should be revealed[1].

Let this data be swarmed over by think tanks and legions of rabid dissertation-seeking finance graduate students and tenure-hungry junior faculty. Even with modern computer processing, that's going to take time. Only after an overall picture emerges should regulation be structured.

Formatting requirements should be kept simple to minimize the reporting burden. The USA should take the lead--the mess is primarily due to the negative consequences of our financial innovation--, but we might wish to team internationally.

The danger is that such regulation will drive business offshore and, like Sarbanes-Oxley is said to have done, further erode American leadership of global financial markets. A way to offset that is to maximize transparency and minimize complexity. The goal is that listing in the database, by creating confidence, will add value to an instrument relative to a similar one that is unlisted offshore. Ideally, once the system is in place, participants will recognize its value and its mandatory nature will almost be beside the point; I'd like to say that it could eventually be relaxed, but, given the proclivities of Wall Street wise guys, I hesitate to do so.

Clarification. This post was begun in September 2007 but not published until late January 2008. I wanted to develop a more cogent formulation, but finally realized that
It is a capital mistake to theorize before one has data. Insensibly one begins to twist facts to suit theories, instead of theories to suit facts.

[1] Update May 12, 2008: During an interview, George Soros proposed something similar.