Archive for February, 2009

 

John Allison On the Banking Crisis

Saturday, February 28th, 2009

BB&T president John Allison gives an amazing lecture on the origins of the banking crisis in the United States. I admit to learning quite a bit watching it. It’s almost an hour and a half, so block out some time to watch it, and go through the slides while watching the lecture. But this is seriously the best explanation of what has happened that I’ve yet seen.

Watch John Allison.

 
 

Atlas Shrugged Sales Way Up

Thursday, February 26th, 2009

Posted without comment:

Washington, D.C., February 23, 2009–Sales of Ayn Rand’s “Atlas Shrugged” have almost tripled over the first seven weeks of this year compared with sales for the same period in 2008. This continues a strong trend after bookstore sales reached an all-time annual high in 2008 of about 200,000 copies sold.

“Americans are flocking to buy and read ‘Atlas Shrugged’ because there are uncanny similarities between the plot-line of the book and the events of our day” said Yaron Brook, Executive Director at the Ayn Rand Center for Individual Rights. “Americans are rightfully concerned about the economic crisis and government’s increasing intervention and attempts to control the economy. Ayn Rand understood and identified the deeper causes of the crisis we’re facing, and she offered, in ‘Atlas Shrugged,’ a principled and practical solution consistent with American values.”

Link. (via instapundit)

 
 

No More Leeches! Just Let Me Heal…

Thursday, February 26th, 2009

It was almost two hundred and ten years ago that the father of our country, George Washington, lay down on what was to be his death bed. The former president had fallen ill, and he requested doctors be brought to him.

Being a wealthy man and a former president, he had at his disposal the best doctors of his day, trained in the accepted wisdom and practices of his era. The accepted wisdom was that disease came from an imbalance of humors that lay within the body, and that the humors needed to be released from the body to achieve good health once again. The accepted practice for releasing these humors from the body was by bleeding.

The idea of the body being governed by “humors” had ancient roots, going back to the earliest of ancient Greek physicians. It amounted to an attempt to create an analogue within the body to the four ancient elements: Air, Fire, Earth, and Water. It was only as germs and nutrition began to be understood in the 19th century that these ancient ideas began to be dismissed as the bunk they were.

Washington however, believed in the accepted wisdom of his day, including the existence of humors that needed re-balancing. And so when his doctors came to visit him, with leeches and a variety of sordid instruments, akin to torture implements, to make him bleed from his neck and extremities, he encouraged the doctors to ply their trade. It is said that at one point, when Washington appeared to be in severe agony, the doctors asked the great general if he needed to take a break. But being the hero he was, he is said to have replied, “Apply more leaches.” And his doctors complied.

George Washington died two days after taking ill.

And so today we find that our financial system, indeed our country, has taken ill. The going theory is that the varying animal spirits in the market got out of balance, and caused a bubble. The result has been fear and panic in the marketplace. Conventional wisdom holds that the way to break the fear in the market, to re-balance the animal spirits as it were, is to have the government forcibly take money out of the hands of those clutching it for dear life, and give it to plebeians and government cronies to spend on comic books and bubble gum. This consumer spending will generate a multiplier effect, as comic book and chewing gum vendors in turn spend the money to replenish their supplies. And their suppliers spend the money again, and so on, generating a monetary velocity that will revive the economy.

The theory is bunk.

We are suffering from a lack of capital right now. This capital crunch was caused by people making bad investments in mortgage backed securities, much of which went to people who were taking money out of their houses to consume. Once consumed, that capital was gone. And those homeowners were unable to pay back their mortgages. The problem was so widespread, that there is a general lack of capital in the financial system at the current time, and it is so dire that many businesses are unable to refinance themselves, even though they represent far better credit risks than homeowners did.

The answer to this crisis, then, is not to force the patient to bleed more capital. Rather, it is to enable capital reserves to be rebuilt, and to adjust the market signals (read government policy) which caused so many to go investing in mortgages that they shouldn’t have in the first place. Giving money to government leeches, whether they be connected lobbies or constituencies hooked on entitlements, will not cure the patient. It will kill him.

Today, it is widely understood that Washington had a very curable cold, and was killed by his doctors plying their trade. Our survival is dependent on what we tell our doctors to do at this juncture. Will we, as Washington erroneously did, listen to the conventional wisdom, and grit our teeth and say, “Apply more leeches,” or will we, understanding that we’re getting worse, not better, sicker, not more healthy, have the nerve to defy the “best and brightest” in Washington, D.C. and tell them, “NO MORE LEECHES! Just let me heal…”

The choice is ours. It is not clear if we will choose wisely…

 
 

What McCain Would Have Done

Tuesday, February 24th, 2009

Velociman asks:

Yes, I do envy the Democrats. They play smash mouth, no-holds politics, while the Republicans operate like they are engaged in a Victorian game of whist, wherein it is presumed that as gentlemen they will let the fragile little ladies win a few hands, lest the men be obliged to produce the smelling salts.

The worst part of it? That’s what Bush did. Now imagine what McCain would have done. Oftentimes I wonder if there is ever any fun playing for the perpetually losing team.

He seems to mean had McCain been elected in 2000, in which case I suspect McCain would have likely nuked the Mecca, never would have passed any new entitlements, and likely would have kept the budget balanced for the next 8 years by vetoing stupid pork and keeping congressional Republicans in line.

If McCain had been elected in 2008, I suspect he’d be flailing. Sure, his instincts are to balance the budget and not spend money foolishly, and to be sure that would be an improvement over what we’ve wound up with. But would he really be equipped to handle the current economic crisis? I have no idea.

I will tell you that I now regret voting for Steve Forbes in the 2000 primaries. Had I any idea Bush would have signed campaign finance reform anyways, had I had an inkling of the horrors that were to come on 9-11, I’d have voted for McCain in a minute. 2000 was his year, and it’s beyond tragic that he was denied it.

 
 

Immortality on Facebook

Monday, February 23rd, 2009

Reason #5,621,323 for believing Facebook to be unapologetically evil:

In mid-November 2008, Stephanie Bemister’s brother, William Bemister, passed away. William was an Emmy-winning investigative journalist and used his Facebook profile to communicate with his sister and 2 nieces from his home in Oxford, England – thousands of miles away from Stephanie and her children. The profile contained some of William’s personal information — his phone number, company website and email address — which Stephanie wished to have removed for reasons of privacy and security.

Stephanie contacted Facebook’s privacy division with a copy of William’s death certificate and instructions to remove William’s profile. She was astounded to have Facebook reply with this message:

“Per our policy for deceased users, we have memorialized this person’s account. This removes certain more sensitive information and sets privacy so that only confirmed friends can see the profile or find the person in search. The Wall remains so that friends and family can leave posts in remembrance.”

Needless to say, not only is this unscrupulous, it’s illegal.

Sickened and horrified by the social network’s actions, Stephanie contacted Consumerist to ask for help. Soon after the story was posted, Facebook contacted Stephanie, apologized for the misunderstanding, and removed William’s account.

They actually did eventually apologize, but it seems as if they only ever back down when publicly humiliated and flogged.

Read the whole thing here.

 
 

Creationism

Monday, February 23rd, 2009

I found this surprising:

Some LGF readers ask me: Am I “obsessed?” Do I “hate Christians?” Why do I keep “harping” on this issue?

Answer: The top 3 GOP governors in America are all creationists, who have no problems with teaching pseudo-science to American children.

That’s why. This is wrong, and it’s one reason why the Democrats now control both houses of Congress. If this anti-scientific insanity continues, the Democrats will be in power for the next 20 years.

The three governors he’s talking about are Sanford, Pawlenty and Jindal, all three likely Presidential contenders in 2012. Palin, to the best of my knowledge, has not said anything explicitly advocating creationism, despite what you may see implied in mainstream media reports.

In any event, Johnson is right. A creationist party will be doomed to failure. Yet that is where the party seems to be heading. That is what Bush & Rove hath wrought.

Read more here.

 
 

Your Brother’s Keeper

Sunday, February 22nd, 2009

On objecting to bailing out your neighbors profligacy:

Many others take a harsher view, objecting to the idea of taxpayer money going to help people who borrowed and spent without regard to consequences. “I don’t appreciate paying for someone else’s mortgage,” said Ashling Gowell, 38, a stay-at-home mother who lives in southeastern Massachusetts. “I almost feel its bailing out someone who overspent on their credit card.”

Just you wait Ashling. That’s coming next.

Read the whole thing here.

(via Instapundit)

 
 

Choose Responsibility On 60 Minutes Tonight

Sunday, February 22nd, 2009

Choose Responsibility is an organization devoted to repealing the federal mandate for a national over 21 drinking age. I gave them money last year to further their cause, one in which I fervently believe (and have since I watched the age increase from 18 to 21 while I was a young teen). If you believe that the 21 yr old drinking age is absurd, you may want to consider giving them money too.

Apparently, they are going to be featured on a segment on 60 Minutes tonight. I have no idea if the show will treat them fairly or not, but I thought it would be worth posting information about their appearance here:

We’re in the midst of exciting changes here at Choose Responsibility as we are gearing up to make the most of our upcoming appearance on 60 Minutes. Yes, the air date has finally arrived: this Sunday, February 22.

Along with notifying our many friends and supporters, we have made some updates to our homepage and volunteer center. We hope that you will find these updates helpful.

The 60 Minutes piece is going to be another round of great exposure and an excellent follow up to the coverage of the Amethyst Initiative. We are extremely excited by the growing momentum in this important debate. To maximize this great exposure we need your help to make the most of this amazing opportunity.

UPDATE: Just watched the piece. The basic problem was that Stahl quoted the statistic that highway deaths between the ages of 18-21 decreased from the time after the drinking age was raised to the point after. What she neglected to mention was that they also declined for all age groups. This would imply that it was due to an increase in general understanding of the dangers of drunk driving across the culture, coupled with an increase of penalties, and not due to a change in the drinking age.

Failure to mention that in the report was just plain dishonest.

 
 

Reisman On Savings And Consumption

Sunday, February 22nd, 2009

Economist George Reisman, author of the book Capitalism, has a must-read pice up on savings and consumption, and the fallacy of the Keynesian approach to handling this economic crisis. It’s a must-read, so do take the time to go through it.

UPDATE: Read Part II.

 
 

Credit Crisis As A Cartoon

Saturday, February 21st, 2009

This is a pretty good graphical representation of the credit crisis below (link, via daring fireball).

But they missed two things. The first was that the government actively encouraged the issuance of subprime loans for political reasons and created a market for them via their government sponsored entities, Fannie Mae and Freddie Mac. Investors bought those loans because they believed they had the backing of the Federal Government, making them the equivalent of the Treasury Bills but with a higher rate of return. It’s actually kind of criminal to neglect to mention the government’s role in all of this.

The second thing they missed was that because there wasn’t enough of these CDOs to go around, the bankers on Wall Street enabled hedge funds to naked short sell them to investors, who wound up buying CDOs that didn’t exist. They did this through the “Credit Default Swap” insurance mechanism mentioned in the cartoon. What this served to do was to spread the contagion far beyond where it would have spread had only actual subprime mortgages been sold in the marketplace. To date I’ve seen no attempt to account for just how much of the credit crisis was caused by the naked short selling enabled by Wall Street, but I would hazard to guess that it may have multiplied the problem by as much as an order of magnitude.