Morning Report 6/5/12

Vital Statistics:

  Last Change Percent
S&P Futures  1271.0 -2.0 -0.16%
Eurostoxx Index 2076.6 -2.4 -0.11%
Oil (WTI) 83.63 -0.4 -0.42%
LIBOR 0.468 0.001 0.21%
US Dollar Index (DXY) 82.89 0.328 0.40%
10 Year Govt Bond Yield 1.54% 0.02%  
RPX Composite Real Estate Index 177.6 -0.1  

Markets are flat after some disappointing economic data out of Europe. The Eurozone ISM survey came in at 46 and has been below 50 for the past 4 months, indicating a contraction in the manufacturing sector. The  US Non-Manufacturing ISM will be released at 10:00 am, with economists predicting a reading of 53.5. Equity markets seem to be stabilizing, so we are seeing Treasury investors back away from the ledge. MBS are lower as well.

Germany is becoming more amenable to some sort of pan-European banking coordination. Angela Merkel said: “So we will also talk about to what degree one has to bring the systemic banks under specific European supervision to keep national interests from playing too large a role.” This will be easier said than done, as countries tend to get very nationalistic when talking about banks. Good luck getting the French on board.

CSFB is predicting the Fed will continue monetary stimulus, with a continuation of Operation Twist and buying mortgages. I am not sure why Operation Twist needs to be continued – Europe has done more to lower long-term interest rates than the Fed could engineer. There has been speculation that the Fed could do a hybrid of sorts, where it sells short term paper and buys mortgage backed securities directly.

NPR has an article on the future of the American Dream – homeownership. While most of the article discusses the psychological differences between homebuyers during the bubble and homebuyers before the bubble, they have an interesting chart from showing how much cheaper it is to buy than rent. The chart shows ratio of the cost of homeownership vs the cost of renting since 1986.  The costs are now equal, even if you ignore the interest deduction.

Chart:  Rent vs Buy 

 

90 Responses

  1. Time to buy rental property.

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  2. would love to buy more property. it’s the down payment that’s a killer.

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  3. I thought this was one of the better pieces I’ve wirtten in a while, so I;m going to inflict it on you again today.

    So far the Obama campaign is off to a disastrous start for a variety of reasons. First and foremost is the decision to run what is essentially a “he’s worse” campaign about Romney.

    Nobody outside the Romney family and the Mormon church is voting FOR Romney. They’re voting for or against Obama. Plus there’s only a relatively small part of the electorate that isn’t already committed one way or the other by now. Since we’ve known both of these men for at least 5 years and with the gay marriage card finally played, there are no undecided social issues left. If you haven’t decided whom to vote for yet, it can only be because of the economy.

    Nobody who is worried about the economy cares what Romney did 10 or 20 years ago. They care about what Obama is doing now, and whether the economy will get better. After all, in 2008 there was no reason whatsoever to believe that Obama knew anything about the economy or how to fix it. It was a subject that he had no knowledge or experience of. People voted for Obama as a change, and they will vote against him for the same reason.

    Finally this blame everything on Republican obstructionism idea will fail miserably for two obvious reasons. The “dumb” people will ask how can it be that the Republicans, the minority party both in the US and government are so strong and the Democrats, the majority party in both are so weak? Then the “smart” people will ask, even if the Republicans ARE obstructionist, why should I vote for a Democrat president when we’ll just continue more of the same for 4 years? If you’ve shouted from the rooftops that you can do nothing without the Republicans consent, some voters might start to believe you and work on that end of the problem. As they say in sports, it’s easier to eliminate one coach than 40 players

    Finally get Axelrod out of the public eye. He’s a polarizing figure like Rove and has no business taking such a high profile. Trot out somebody besides he and Biden, even if just to prove that the President isn’t becoming persona non grata in his own party as the election moves closer

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  4. “Republicans ARE obstructionist”

    If you’re trying to win based on opposition to arcane Senate procedure, you’re utterly screwed.

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  5. The other thing, is that Obama really blew it in Afghanistan. Having ended two wars would have been a very powerful argument in his favor, but claiming one as his own and keeping GITMO open cost him that argument entirely.

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    • banned:

      The other thing, is that Obama really blew it in Afghanistan. Having ended two wars would have been a very powerful argument in his favor, but claiming one as his own and keeping GITMO open cost him that argument entirely.

      You are assuming away any negative consequences of leaving Afghanistan or closing Gitmo. That is, you are ignoring the possibility (probability?) that there are real and substantive reasons for not having done so.

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  6. No, I’m saying that there is no reason to be in either place. ANY negative consequences of leaving are greatly exceeded by the cost to the nation of stayiing.

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    • banned:

      Fair enough. You aren’t assuming them away. You are asserting them away.

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    • I thought banned was saying the political consequences were negative for BHO, which they may be. I think Scott is right to assess that there is actual risk from the alternate decision and banned is wrong to dismiss that risk, but as a political calculus I think banned is correct, because any real world consequence of either leaving AFG or closing GITMO would be hard to pin on a single causal event. Because the GITMO alternative was fed prison, closing GITMO could have only led to consequences within a prison. The alternative to staying in AFG could be real world bad for AFG women, and wherever there is civil society there it might break down. Absent a worldwide terror base setting up shop there we would be unlikely as a voting body to care about it. And we would feel free to attack a terror operation, of course.

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      • Mark:

        If memory serves, the primary reason O was unable to close Gitmo was because his fellow Dems in Congress didn’t support it. I imagine the reason they didn’t was because they figured it was a political loser, and for good reason. It’s possible that, 3 years on, people would have forgotten why it was important to them not to close it and so having shut it down would not be a liability, but it is hard to imagine, having closed it in the face of public opposition, he would want to remind people about how he did what they didn’t want him to do by using it as a campaign issue. And I very much doubt there is a significant constituency who will not be voting for Obama because he failed to close down Gitmo.

        It seems to me that as a political matter O would have gotten little or no campaigning benefit out of having closed Gitmo, and having not closed it he avoids getting into a debate about an issue about which most voters disagreed with him. I think that at worst leaving Gitmo open hasn’t harmed O politically, and at best it has actually helped him. At least with regard to Gitmo, banned’s political instincts seem off the mark to me.

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  7. Afghanistan is not a country and never has been. It’s a 19th century tribal warlord geographic area. Stay 10 years or 50 and nothing will change that, as the Russians, Briitsh etc found out before us.

    The Chinese will move in slowly after we’ve gone and exploit some of the mineral wealth, to the extent their own economy goes all to hell.

    There was never any chance that the GITMO prisoners could have been brought to the US for prison or trial. Most should have been repatriated to their countries and the most dangerous ones quietly executed in some other place.

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    • banned:

      …and the most dangerous ones quietly executed in some other place.

      You think that O closing Gitmo and executing Gitmo prisoners “some other place” would have proven to be a political winner for O? I have to admit it is an intriguing possibility. To the extent that O’s natural base on the left would not be soured by such an action (ie to the extent that it is utterly without consistency or principle), he may well have been able to pick up some of the “let God sort ’em out” anti-terrorist support who would not naturally land in the Obama camp and thus have expanded his electoral possibilities.

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  8. should say to the extent that their own economy “doesn’t” go to hell.

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  9. The renting vs owning chart is comparing apples and oranges to some extent–the cost of a house vs the cost of an apartment. I have two dogs and two cats, so there’s no way I could get by with an apartment rather than a house, and renting a house is considerably more expensive than renting an apartment. Hence why I’ll be buying. . .

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  10. I didn’t mean to imply, if I did that there was a poitical advantage in closing GITMO. That would have been in leaving Afghansitan. However it would seem unthinkable to end both wars and leave GITMO open in my opinion.

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  11. there isn’t any blowback in killing people with drones, so disappearing a few more shouldnt be a problem Release them in the mountains of Afghanistan and then track and kill them a few days later.

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    • Someone wrote Dear Abby the other day that she wanted to put a dog finder implant in her mother, whose Alzheimer’s was causing episodes of wandering. The columnist suggested it would be good for children to have them as well. The releasees could be the pilot project for the Abby State.

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    • banned:

      there isn’t any blowback in killing people with drones, so disappearing a few more shouldnt be a problem

      That’s a fair, albeit cynical, point. Although it certainly would be interesting to see the kind of fun Republicans could have in campaign ads contrasting the words of candidate Obama on the injustices of Gitmo and military tribunals with the actions of a President Obama executing Gitmo prisoners.

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  12. “You think that O closing Gitmo and executing Gitmo prisoners “some other place” would have proven to be a political winner for O?”

    Wouldn’t hurt. Release them in Yemen. Kill via drone. bonus points if they’re US citizens. cue outrage from Greenwald, token objections from others, who would express disappointment but would rationalize that this election is too important to stay home and/or withhold contributions, and crickets from everyone else.

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  13. d’oh. so that’s what a corking feels like.

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  14. A different note. IF and that being the big IF you believe in a US and world recovery then you are looking at the bargain prices of a lifetime in oil and nat gas espeically.

    We have stabilized today, but without an agreement of signiifcance from Europe this week WTI will certainly drop below $80 a barrel. To the extent that there is a recovery, it will almost certainly be based on a monetary change. That can only help prices.

    I am often a commodites bull, so you may discount this entirely like antyhing from the gold bugs. Something for your consideration however.

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  15. scott

    We Americans are rather boodthirsty about other people. all we have to do is say they were acting “irrational” and it gives us license to kill anyone anywhere.

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    • banned:

      We Americans…

      By which, presumably, you mean Americans other than yourself. But I don’t buy it. I know I’m not bloodthirsty about other people at all, and Americans in general don’t strike me to be so either, or at least not any more than any other nationality. I wonder on what evidence you base your claim.

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  16. nope. no idea really.

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  17. scott

    In the last 50 years or so worldwide we’ve been directly or indirectly responsible for the death of at least one million non-American civilians worldwide. Nobody else can come close to that total. If we were a terrorist organization, we’d be the very best.

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    • banned:

      If we were a terrorist organization, we’d be the very best.

      I confess I never would have taken you for a Chomskyite. Lots to say about this rubbish, but it will have to wait until later.

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  18. scott:

    It’s basically our marketing brilliance. As per last week’s discussion, we use the media to pound it into the head of the populace that others are “irrational” and therefore must be killed before they kill others. That’s a neocon specialty, most notably Fred Hiatt.

    Iran is the lastest Irrational actor, just like Iraq was before it and so on. The Soviets turned out to be remarkably rational people, in spite of our portryals of them, and ultimately got rid of their government, as did the Chinese. Had they not had nuclear weapons, we undoubtedly would have shown them what happens to Irrational American enemies long ago.

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  19. NoVA (and Scott, although I think Scott knows this story already):

    “Corking” came via Shrink from the PL. Years ago he flew helicopters spotting fish runs for fishing boats. The pilots radio to the boats to tell them where the fish are and what direction they’re heading in so that the boat can get in front of them and drop their nets (held up, of course, by corks); if another pilot manages to maneuver his boat in between the fish and your boat, and drops his nets to get the fish first, you’ve been corked.

    Voila!

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    • Mich…tks. i never knew that.

      Any chance you will clarify?

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    • banned:

      I meant that nobody has come close to causing the amount of civilian deaths that we have world wide

      How many has the US caused? You also qualified this earlier with “both directly and indirectly”. Can you specify how many civilian deaths the US has cause directly and how many indirectly? I’ll save the questions about how you’ve established indirect causality for later.

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  20. no problem. by that comment, I meant that nobody has come close to causing the amount of civilian deaths that we have world wide

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  21. mich:

    Good trivia.

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  22. Sometimes my specialty, John! 🙂

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  23. never would have guess that. thanks.

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  24. the figures for Vietnam, Laos and Cambodia range from a low of 400,000 to a high of double that.

    Iraq would be anywhere from a low of about 150,000 to a high of double that also, excluding the more wild estimates.

    I would put a reasonable figure from just those two conflicts alone at about 2/3 of a million. I won’t even include Afghanistan, because you can make a good argument that at least the first few years were necessary.

    Then we don’t have enough space to talk about the various proxy wars around the globe in the last 50 years.

    for instance we supplied all the arm to the Afghan “freedom fighters” against the Russians in what now must be seen as a huge mistake because we are the 21st century russians there.

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    • banned:

      OK, so let’s up it to an even 1 million for Vietnam and Iraq. Let’s double it to include Afghanistan, and add another cool million to cover for the things we don’t have enough space to talk about. Is that reasonable? You sure you don’t want to go back and include civilian deaths caused by the US in WWII? Lots, especially in Japan, France, and Germany. That will surely help your cause. I just want to get a baseline number that you are working off of so we can start looking into your claim. Let me know.

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  25. Scott:

    The magic eight ball says. . . . My sources say no

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  26. scott;

    We could also throw in the death of these people in the 1991 uprisings that we encouraged but didn’t actually support:

    “The trial of 15 former aides to Saddam Hussein, including Ali Hassan al-Majid, over their alleged role in the suppression of a Shia uprising and the deaths of 60,000 to 100,000 people, took place in Baghdad in August 2007.[13] Al-Majid had been already sentenced to death in June 2007 for genocide against the Kurds. He was convicted again and executed in January 2010.”

    http://en.wikipedia.org/wiki/1991_uprisings_in_Iraq

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  27. “The renting vs owning chart is comparing apples and oranges to some extent–the cost of a house vs the cost of an apartment.”

    You are right. I was mainly using the chart to show how much cheaper buying has become relative to renting.

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  28. Brent:

    I was mainly using the chart to show how much cheaper buying has become relative to renting.

    My realtor estimates that I’d be spending at least $400/month less on a mortgage for the house that I’m in that I’m paying in rent–my landlord is renting it because it’s underwater and he can’t unload it right now. I’d probably be paying even less than that given the 25% down I’m planning on paying.

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  29. “bannedagain5446, on June 5, 2012 at 8:47 am said:

    I thought this was one of the better pieces I’ve wirtten in a while, so I;m going to inflict it on you again today.

    So far the Obama campaign is off to a disastrous start for a variety of reasons. First and foremost is the decision to run what is essentially a “he’s worse” campaign about Romney.”

    Krugman identified what is probably Obama’s biggest problem in his column on Monday:

    “Instead, the president’s advisers keep turning to happy talk, seizing on a few months’ good economic news as proof that their policies are working — and then ending up looking foolish when the numbers turn down again. Remarkably, they’ve made this mistake three times in a row: in 2010, 2011 and now once again. ”

    http://www.nytimes.com/2012/06/04/opinion/krugman-this-republican-economy.html?_r=1&partner=rssnyt&emc=rss

    The big issue with Obama’s case for reelection the disconnect between his rhetoric and promises regarding economic policy and the reality as experienced by most Americans. Given how often he flip flops between a stated focus on the deficit and small level fiscal stimulus approaches, he can’t even make a case as a consistent Keynesian advocate the way that Krugman could if he was running himself. From a macroeconomic policy standpoint, Obama is simply incoherent.

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  30. “ScottC, on June 5, 2012 at 10:58 am said:

    banned:

    We Americans…

    By which, presumably, you mean Americans other than yourself. But I don’t buy it. I know I’m not bloodthirsty about other people at all, and Americans in general don’t strike me to be so either, or at least not any more than any other nationality. I wonder on what evidence you base your claim.”

    More bloodthirsty, probably not. However, our national political class is definitely more prone to military interventions in other countries based on relatively spurious rationales, whether it’s progressive Wilsonianism in it’s latest variant as R2P or the neoconservatives.

    We seem to be the only country that invades other countries for their own good.

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    • jnc:

      However, our national political class is definitely more prone to military interventions in other countries based on relatively spurious rationales, whether it’s progressive Wilsonianism in it’s latest variant as R2P or the neoconservatives.

      More prone? I’m not so sure. The trouble with this kind of analysis is that it ignores the effect that the projection of US power has on the behavior of other nations. If the US had maintained for the last 100 years a FP similar to, say, Switzerland, is it possible that other nations (USSR, China, Germany, Japan to name a few) might have proven to be more prone than they were to interventions in other countries based on spurious rationales? Likely? Is it possible that another nation or group of nations would have taken on the role that the US has played over that time, and thus proven themselves as “prone” to interventions as the US. Or, would the world really be a much more idyllic, happy and peaceful place if only the US would just keep to itself?

      Don’t get me wrong. I am not saying that any and all US actions in the world are or have been justified. But given US dominance in the world both militarily and economically, it makes no sense to me to compare/condemn the behavior of the US relative to that of other nations in the world without accounting for the fact that much of that behavior is a function of US dominance in the first place.

      We seem to be the only country that invades other countries for their own good.

      Actually such invasions have been taking place since the dawn of nations. See European, and especially British, imperialism for an obvious example.

      That aside, I’m not sure what invasions you are talking about. The US invaded Iraq for it’s own (perceived) good, not anyone else’s, and I don’t think anyone ever claimed any different. To be sure, it was also argued that the people of Iraq would be better off without Saddam (which in large part they probably are) but that was never the primary justification for the invasion, and in the absence of any perceived US interest, the invasion would never have happened. Did you have something else in mind?

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  31. “ScottC, on June 5, 2012 at 10:41 am said:

    banned:

    there isn’t any blowback in killing people with drones, so disappearing a few more shouldnt be a problem

    That’s a fair, albeit cynical, point. Although it certainly would be interesting to see the kind of fun Republicans could have in campaign ads contrasting the words of candidate Obama on the injustices of Gitmo and military tribunals with the actions of a President Obama executing Gitmo prisoners.”

    I wouldn’t characterize the lack of domestic political consequences from the drone strikes as the same thing as no “blowback” as that term is more often used with regards to unintended consequences in the countries where the strikes are occurring.

    With regards to closing Guantanamo, the simpler solution would be to transfer all the detainees to Bagram airfield in Afghanistan first as the Obama administration succeeded where the Bush administration failed in getting the Supreme Court to establish a habeas corpus free zone for the detention of terrorist suspects there.

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  32. scott:

    “You sure you don’t want to go back and include civilian deaths caused by the US in WWII? Lots, especially in Japan, France, and Germany. ”

    which of those wars are we dricetly responsible for?

    The fact of the matter is, there is no historian who believes that South Vietnam would not have fallen in 1965 if not for our disastrous introduction of ground troops there. So we are responsible for 8 years of unnecessary civilian deaths in those three countries to produce the exact same result as if we had never been there at all.

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    • banned:

      which of those wars are we dricetly responsible for?

      Well, using the rather interesting method of assigning responsibility that you use for Vietnam, I suppose the US was responsible for most of the fighting, and hence civilian casualties in Northern Africa and western Europe. After all, if not for the “disastrous” US introduction of ground troops, first in Northern Africa in 1943 and later in Italy and then France, they all would have remained under relatively peaceful German occupation. So clearly post 1943 civilians deaths are the fault of the US.

      Also, had Roosevelt not implemented trade sanctions and an embargo against Japan, they never would have felt compelled to attack Pearl Harbor, and the US would never have been involved in the Asian war. So, again, I guess according to your unique method of assigning blame, the US was responsible for prolonging the war for 4 years after 1941 and hence the subsequent civilian casualties.

      So what do you say…shall we include US-caused civilian casualties from WW II in your count? I don’t want to shortchange you. Hiroshima and Nagasaki are generally considered to have had about 225,000 combined civilian casualties, so let’s double it, round it up to 500,000, and call that US-caused civilian deaths for WW II, bringing our post-1940 US-sponsored worldwide bloodbath up to a net total of 3.5 million. Is that a reasonable baseline? Again, please let me know.

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  33. The problem with the campaign theme “the Republicans sabotaged the economy” is that the idea that a couple of hundred Republicans in the US Congress control the world economy is too stupid for anybody but a Fox viewer to believe, and they’re all voting for Romney.

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  34. jnc:

    “We seem to be the only country that invades other countries for their own good.”

    we have to kill them to save them, probably because they’re acting irrationally.

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    • banned:

      we have to kill them to save them, probably because they’re acting irrationally.

      Has anyone actually ever said this, or is it just the straw man that it appears to be?

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  35. “bannedagain5446, on June 5, 2012 at 4:01 pm said: Edit Comment

    scott:

    “You sure you don’t want to go back and include civilian deaths caused by the US in WWII? Lots, especially in Japan, France, and Germany. ”

    which of those wars are we dricetly responsible for?

    The fact of the matter is, there is no historian who believes that South Vietnam would not have fallen in 1965 if not for our disastrous introduction of ground troops there. So we are responsible for 8 years of unnecessary civilian deaths in those three countries to produce the exact same result as if we had never been there at all.”

    That was not at all obvious in 1965. The “Best and the Brightest” wasn’t just a turn of phrase, it did represent a level of intellect and seriousness in government that was present then. And if they could screw up Vietnam and fail to see the long term effects of the spending programs in the Great Society, then I have zero expectation that our current crop of politicians is going to do any better and in fact will probably do a lot worse with programs such as the PPACA.

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  36. “Please Excuse My President
    Peter Wehner — June 2012

    Few things are more difficult in politics than confronting failure and learning from it. It is especially difficult when a leader you have championed, and in whom you have placed your highest hopes, turns out to be less than he seemed.

    Such is the dilemma facing liberals in the age of Obama. Barack Obama entered the presidency with his sights and standards very high, and many liberals believed he could be the transformative figure they had been awaiting for generations. But by now it is clear that, by any reasonable measure (including those set out by Obama himself at the beginning of his term), his presidency has been a failure.”

    http://www.commentarymagazine.com/article/please-excuse-my-president/

    Like

  37. “Morgan Stanley Now Lending Out Facebook Shares To Short Sellers”

    http://www.cnbc.com/id/47695838

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  38. OT: Latest Matt Taibbi:

    “SEC: Taking on Big Firms is ‘Tempting,’ But We Prefer Picking on Little Guys
    POSTED: May 30, 11:23 AM ET”

    http://www.rollingstone.com/politics/blogs/taibblog/sec-taking-on-big-firms-is-tempting-but-we-prefer-whaling-on-little-guys-20120530

    Like

  39. “Did you have something else in mind?”

    Most other countries reserve military force for promotion of their actual interests. We seem to be willing to use it (or at least justify it) in a much broader context under various rubrics designed to advance the idea that we are helping the populations of the countries that we invade. The results to date of the Bush/Obama counterinsurgency programs have renewed my disdain of “nation building” as a justification for an extended military occupations.

    Getting Saddam didn’t require us to undertake the CPA in Iraq afterwards and we did quite well initially in Afghanistan with using the Northern Alliance as our proxies with CIA and special forces help rather than trying to use a large ground force to help bring democracy and respect for human rights to the area.

    I have a much narrower view of U.S. interests than most. I see no need for us to pick sides in every conflict in the world.

    Like

    • jnc:

      We seem to be willing to use it (or at least justify it) in a much broader context under various rubrics designed to advance the idea that we are helping the populations of the countries that we invade.

      I just think that US FP is premised on the notion that certain forms of government (democratic) and certain kinds of society (relatively open and free) are ultimately beneficial both to US interests and to local populations. That premise of necessarily aligned interests may be debatable, but it isn’t an outrageous assumption. And of course in a culture that routinely derides self-interest and nearly worships altruism, it is far easier to market actions as benefiting someone else than benefitting oneself.

      Getting Saddam didn’t require us to undertake the CPA in Iraq afterwards and we did quite well initially in Afghanistan with using the Northern Alliance as our proxies with CIA and special forces help rather than trying to use a large ground force to help bring democracy and respect for human rights to the area.

      I have a lot of sympathy for the view that having solved our immediate problem in either Iraq or Afghanistan, we should leave whatever mess is left for the locals to sort out themselves, but the contrary view, that our long term interests are served by having stable, friendly regimes in place, is not entirely unreasonable.

      I see no need for us to pick sides in every conflict in the world.

      I have a lot of sympathy for that view, too.

      Like

  40. “ScottC, on June 5, 2012 at 6:23 pm said:

    banned:

    which of those wars are we dricetly responsible for?

    Well, using the rather interesting method of assigning responsibility that you use for Vietnam, I suppose the US was responsible for most of the fighting, and hence civilian casualties in Northern Africa and western Europe. After all, if not for the “disastrous” US introduction of ground troops, first in Northern Africa in 1943 and later in Italy and then France, they all would have remained under relatively peaceful German occupation. So clearly post 1943 civilians deaths are the fault of the US.”

    You need to go back further. Wilson should never have involved the US in World War I.

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  41. Interesting read given that this was written in 2007 and is still applicable to the Obama administration:

    “Republic or empire:
    A National Intelligence Estimate on the United States

    By Chalmers A. Johnson”

    http://www.harpers.org/archive/2007/01/0081346

    I think it showcases the choice facing the United States as a result of the level of military interventions it undertakes abroad.

    I’ve been coming around to Pat Buchanan’s way of thinking as a result of the War on Terror:

    “A Republic, Not an Empire
    Reclaiming America’s Destiny
    By PATRICK J. BUCHANAN”

    http://www.nytimes.com/books/first/b/buchanan-republic.html

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  42. For you Banned:

    A particularly bad line from Yglesias where he conflates the effects of the (unstated) Paradox of Thrift on growth with “mathematical impossibility”.

    “Mathematically speaking, it’s not possible for David Brooks to save money unless someone wants to borrow the money.”

    http://www.slate.com/blogs/moneybox/2012/06/05/the_banality_of_debt.html

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  43. Given that the primary reason for invading Iraq (WMD, anyone?) changed with the wind, I’d say that at some point the argument was in Iraq’s best interest. I seem to remember a certain VP claiming we’d be welcomed with flowers or something to that effect.

    Face it, Scott, we loves our military. You really should read “Drift”, just try to forget that Rachel Maddow wrote it and I’ll bet you’d agree with 80%+ of it.

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  44. You know I loves me some Yglesias!

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  45. funny I lost two posts responding to scott

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  46. “Michigoose, on June 5, 2012 at 7:16 pm said:

    Given that the primary reason for invading Iraq (WMD, anyone?) changed with the wind, I’d say that at some point the argument was in Iraq’s best interest. I seem to remember a certain VP claiming we’d be welcomed with flowers or something to that effect.

    Face it, Scott, we loves our military. You really should read “Drift”, just try to forget that Rachel Maddow wrote it and I’ll bet you’d agree with 80%+ of it.”

    Michigoose, you may like Dana Priest’s books:

    “The Mission: Waging War and Keeping Peace with America’s Military”

    http://www.amazon.com/The-Mission-Keeping-Americas-Military/dp/0393325504

    “Top Secret America: The Rise of the New American Security State”

    http://www.amazon.com/Top-Secret-America-American-Security/dp/0316182206

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  47. Thanks, jnc, I’ve read “The Mission” and did like it. I’ve got “Top Secret” pre-ordered now–I hadn’t heard about it till you gave me the link.

    As a vet, I find myself alternatively appalled and fascinated with how the military is being/has been used in the late 20th/early 21st century. I worked in elite units, and I have to say that–at the junior officer-to-early field grade level at least–we really didn’t have the bigger picture in how we were being misused. Or maybe “mal-used” would be the better term.

    BTW, anyone else following the transit of Venus? Or am I the only geek tonight??

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  48. I always liked Priest’s analogy of the various combatant commanders of the unified combatant commands to Roman proconsuls in terms of how much power they can wield over their areas of authority.

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  49. Huh; for some reason the first time I went to Amazon it showed “Top Secret” as not published yet. . . but somehow it just showed up on my Kindle.

    If I were a conspiracy theorist I could make hay with this!

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  50. “ScottC, on June 5, 2012 at 8:12 pm said:

    but the contrary view, that our long term interests are served by having stable, friendly regimes in place, is not entirely unreasonable.”

    I question our capacity and willingness to actually make the sustained commitment necessary to successfully conduct a counterinsurgency over the decades required to do so and also whether it is possible to build/impose “a stable, friendly regime” on another country without an occupation equivalent to what was done in Japan and Germany.

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    • jnc:

      I question our capacity and willingness to actually make the sustained commitment necessary to successfully conduct a counterinsurgency over the decades required to do so and also whether it is possible to build/impose “a stable, friendly regime” on another country without an occupation equivalent to what was done in Japan and Germany.

      I think it is probably a certainty that at the very least we do not have the national will to do so, even if we do have the capacity.

      [edit – “probably a certainty”? Now that is an interesting notion, Scott. How about “almost a certainty”.]

      Like

  51. Scott:

    I have a lot of sympathy for the view that having solved our immediate problem in either Iraq or Afghanistan, we should leave whatever mess is left for the locals to sort out themselves, but the contrary view, that our long term interests are served by having stable, friendly regimes in place, is not entirely unreasonable.

    Understood, but it sure does cost us a lot of $$$$$. And anger (in some parts of the world). Not to mention $$$$$ And Constitutional questions. OK, now jnc has given me a second book (“The Mission”) that I recommend to you! 🙂

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  52. sorry all i can do is post short phrases like this

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    • banned:

      Seems odd. Are you posting on the dashboard comments page or on the actual post page? I’d recommend trying whichever you haven’t been doing.

      Like

  53. try agan tomorrow

    Like

    • Good article in WSJ today, unfortunately behind the firewall:

      In the deluge of I-told-you-so’s, the critics have one unassailable tautology on their side: Government can ban losses from particular activities by banning those activities. But that just leaves banks turning to other activities that are also risky. At what can banks make money without risk of losing it? The answer is “nothing.”

      And before you say, banks should be making plain loans, remember that plain loans have been a root of every banking mess in recent decades. In 2008, it was loans to home buyers. In the late 1970s and in Europe again today, it was loans to sovereign governments. In the S&L disaster, it was loans to real-estate developers.

      In any case, it’s not bad loans but creeping doubts about the government’s own guarantees that prompt the really disastrous episodes, as in 2008.

      To voice a heresy, if we’re going to have a government-insured banking system that repeatedly encounters and perhaps causes financial turbulence, then having most of the risk concentrated in a handful of very large banks is a regulatory convenience. It makes it easier for Washington to stabilize the system by stabilizing just a few institutions.

      Not that a different approach is difficult to conceive of, if anyone were interested. Cut back on deposit insurance—say, by requiring that government-guaranteed deposits be backed 100% by assets already guaranteed by government, like Treasury bills. Uninsured bank creditors who now free-ride on the deposit insurance system would be less certain of being bailed out too. Markets would be less willing to finance large and complex banks. Those banks would likely have to get smaller.

      Would the result be fewer bubbles and less financial turbulence? Who knows? Undeniable is that guarantees were operating at many levels in the housing bubble, including Fannie and Freddie.

      But this is idle speculation. The U.S. is committed to a system resting on a small number of giant, government-aligned institutions. And unsung is perhaps the most important factor in the J.P. Morgan snafu. Central banks everywhere, trying to goose sluggish economies and prop up fragile banking systems, are creating giant pools of liquidity that must go somewhere. That some pooled up at J.P. Morgan, finding its way into a large, hedgeable portfolio of relatively safe corporate bonds, is hardly surprising.

      Worth reading the whole thing. If you can’t get behind the firewall let me know and I can e-mail the article to you via WSJ.

      Like

      • Scott, I wouldn’t mind reading the entire article if you wouldn’t mind emailing it to me. Thanks

        Like

      • Also, of course, it shouldn’t pass without mention….Scott Walker won the recall election in a big way. I’m beginning to have doubts about the inevitability of O being a 2-termer.

        (Careful banned, it’s a link to FOX. You might turn stupid for having read it.)

        Like

  54. Mark:

    Cooooooool, isn’t it?!!

    Like

  55. To the previous list of Hiroshima and Nagasaki, I would add Dresden just to be pan-global about our WWII commitment to inflicting terror on our enemies by randomly bombing civilians. Not that the Germans didn’t start it with the Blitz and later V-1s and V-2s. We were just so much better at it.

    And just to stay in our hemisphere, we have a habit of invading a banana republic for its own good at a rate of about one a decade.

    Like

    • yello:

      I would add Dresden

      Well Britian is half responsible for that. Although without the disastrous US injection of itself into the war prior to then, surely Britain would have been in no condition to mount the offensive. Plus they were probably flying in lend-lease aircraft as well, so I guess we can take credit for 100% of those civilian casualties as well.

      European civilians clearly would have been much safer without the nefarious Americans interfering.

      BTW…should we also look at civilian casualties during the Civil War inflicted by the North? Southerners status as non-US citizens is a bit ambiguous.

      I’m sure if we make an effort, we can firmly establish that the US has been the most monstrous regime to ever exist on the face of the earth.

      Like

      • This whole discussion brings to mind an old WF Buckley metaphor about one man who pushes an old lady out of the way of a coming bus and another who pushes an old lady into the path of a coming bus. Each of them, apparently, just likes to push old ladies around.

        Like

      • BIGGER THAN DRESDEN:

        The attack during the last week of July, 1943, Operation Gomorrah, created one of the greatest firestorms raised by the RAF and United States Army Air Force in World War II,[2] killing 42,600 civilians and wounding 37,000 in Hamburg and practically destroying the entire city.[3]

        BIGGER THAN HIROSHIMA:

        334 B-29s took off to raid on the night of 9–10 March, 1945 (Operation Meetinghouse), with 279 of them dropping around 1,700 tons of bombs. Fourteen B-29s were lost.[6] Approximately 16 square miles (41 km2) of the city were destroyed and some 100,000 people are estimated to have died in the resulting firestorm, more immediate deaths than either of the atomic bombings of Hiroshima and Nagasaki.[7][8] The US Strategic Bombing Survey later estimated that nearly 88,000 people died in this one raid, 41,000 were injured, and over a million residents lost their homes. The Tokyo Fire Department estimated a higher toll: 97,000 killed and 125,000 wounded. The Tokyo Metropolitan Police Department established a figure of 124,711 casualties including both killed and wounded and 286,358 buildings and homes destroyed. Richard Rhodes, historian, put deaths at over 100,000, injuries at a million and homeless residents at a million.

        I WISH WE HAD HAD THE B-29 AND THE A-BOMB ONE YEAR EARLIER SO THAT WE COULD HAVE ENDED THE WAR IN EUROPE in 1944, AND WITH THE IRON CURTAIN LOCATED MUCH FURTHER TO THE EAST.

        But if wishes were horses, beggars would ride.

        War that targets civilians is illegal under our treaties. There is no doubt that in destroying industrial Hamburg, for example, that we killed, maimed, and made homeless civilians. Did we target them? There was a line of thought among theater commanders and certainly Churchill that the German spirit had to be broken. Considering that there was no way to destroy enemy commerce and industry without countless civilian casualties, fine line drawing was not essential. Nor was it essential to the Hiroshima decision. History says Nagasaki was a mistake, but hindsight is 20-20. No American in authority knew the Japanese Emperor had decided on surrender before that bomb was dropped.
        It is also true that the Pacific command wanted Stalin to know we had more than one bomb, so there were mixed motives at work. Nevertheless, a direct approach from the Emperor to Truman on August 8 would have saved Nagasaki, I think.

        Like

  56. “ScottC, on June 6, 2012 at 6:09 am said:

    Good article in WSJ today, unfortunately behind the firewall:”

    The issue was never the ability of the banks to engage in activities that would possibly cause losses, but rather their ability to engage in activities that could create sufficient “systemic risk” that it would be necessary to transfer the losses to someone other than bank shareholders and bond holders.

    Like

    • jnc:

      The issue was never the ability of the banks to engage in activities that would possibly cause losses…

      The uproar over JPM’s recent loss suggests otherwise.

      …but rather their ability to engage in activities that could create sufficient “systemic risk” that it would be necessary to transfer the losses to someone other than bank shareholders and bond holders.

      Actually, since any banking activity could create this risk if enough banks are doing the same thing in big enough size (like, for example, real estate lending as we have seen), the issue mainly seems to be only certain kinds of activity that creates this “systemic risk”. If you want to eliminate systemic risk you will have to eliminate the system itself.

      Like

  57. “…there isn’t any blowback in killing people with drones, so disappearing a few more shouldnt be a problem”

    I would argue that this theory only works for a Democratic president. If an R was in the WH, there would be serious blowback. Which in a strange way, makes me think in this instance, that BHO will be more effective with this policy than Romney would be.

    Like

    • Am I the only one who draws the distinction between targeted killing with drones in combat [GOOD] and the executive being able to call a citizen or a legal resident alien, residing on US territory or under the jurisdiction of the USA, an enemy of the state [BAD]?

      Just imagine if we could have taken out Hitler, Mussolini, and Tojo with drones. All good, no?

      This is D-Day, btw.

      Like

      • mark:

        This is D-Day, btw.

        Damn. I wanted to write something up for D-day and totally forgot about it.

        BTW, no, you are not the only one. Clearly US citizens in the US are properly provided more constitutional protections than foreign nationals in another country.

        Like

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