Bits & Pieces-Open Thread for Sat. Night

Posted on September 18, 2011 by lmsinca

Kevin Drum had this poll up today which I found interesting. It’s no wonder Republicans can swing the debate their way by not compromising. This will coincide nicely with a post I’m working on making the case that conservatives, at the far right end of the spectrum at least, or what we all call the base, stick to their ideology with the zeal of religious faith. I wonder if after seeing this poll anyone can really argue against that.

“We’ve seen this result before, but here’s some confirmation from a recent CBS poll. If you ask Democrats if their politicians should stick to their guns come hell or high water, virtually no one thinks that’s a good idea. Compromise reigns supreme. Ask Republicans, and you get a very sizeable chunk who are ready to die for every hill — and, undoubtedly, ready to punish any politicians who doesn’t. I’m not sure that a single poll question can explain Washington all by itself, but if there is one, this is it. Republicans are scared of their base; Democrats aren’t.”

Posted by lmsinca (I just typed the line in unless someone has a better idea)

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Apropos of Nothing: Merrie Olde England

Posted on September 17, 2011 by msjs0315

I have London on my mind this weekend. Niece #3 heads there this evening for her semester abroad experience. So I thought I’d read up to see what she’ll land in come Sunday morning.

—PM David Cameron seems to be competing with French president Nicolas Sarkozy as to which European leader gets the bigger rock star welcome in Libya.

http://www.dailymail.co.uk/news/article-2037693/David-Cameron-Libya-visit-PM-Nicolas-Sarkozy-compete-glory.html?ito=feeds-newsxml

Does the term ‘mission accomplished’ and all it came to represent mean nothing to these men?

–Unlike many conservative pols on this side of the pond, Cameron is “emphatically in favour of gay marriage.”

http://www.pinknews.co.uk/2011/09/16/david-cameron-emphatically-in-favour-of-gay-civil-marriage/

–Unemployment in the UK is at 7.9%. I’m not clear yet on the specifics, but there seems to be evidence of a national jobs effort in the UK. Unlike in the US, where there seems to be evidence of more political gridlock.

http://www.fx-mm.com/8513/trading-commentaries/trading-commentary-currencies-direct/uk-unemployment-rises/

–I’m hoping my niece doesn’t run into these creepy dudes. Hopefully they will remain out of sight until next summer.

http://sports.yahoo.com/olympics/blog/fourth_place_medal/post/London-unveils-creepy-looking-mascots-for-2012-O?urn=oly-242206

–The exchange rate is moving slightly in my niece’s favo(u)r. A month ago, one pound sterling was worth about $1.65. Now it’s about $1.58. Not a lot, but better than the other way around.

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Bank Deposits Should Be At Risk

Posted on September 17, 2011 by ScottC
Suppose you own a store and want to protect your inventory from shoplifters.  You probably pay to install video cameras, and may even hire a security guard to wander around.  Suppose you are a celebrity, and want to protect yourself from adoring and perhaps not so adoring fans.  You probably pay to hire a bodyguard to travel around with you.  Suppose you own a cache of diamonds and want to protect it from theft.  You probably either pay to have a safe installed in your house, or you pay for a safe deposit box in someone else’s safe.


The common thread here is that, if you want to protect something, you generally have to pay to get someone else to protect it.  Oddly, however, when we want to protect our money, what do we do?  We deposit it in a bank and, rather than pay them to protect it, we expect them to pay us for the privilege of protecting it.  This makes no sense whatsoever.


The truth is that the only reason that banks are able to pay interest on deposits with them is because, far from protecting our money, they are putting it at risk.  That is precisely what interest represents…a premium received as payment for taking the risk that one may not get back one’s money.  And that is precisely the service that banks perform when they take deposits.  They do not protect your money.  They help you earn more money by putting what you already have at risk.


The federal government has obscured this fact, and through its federal guarantees on bank deposits led people to believe that they should be able to earn money with their money without ever taking any risk.  FDIC offers up the possibility of a free lunch.  This is a nonsensical view of reality.


There are some real economic benefits to FDIC insurance, but they derive mainly from tricking people into taking risks with their money, through the promise of a free lunch, that they wouldn’t otherwise take.  If you really wanted to protect your money, you should rent a safe deposit box at a bank.  This is a service that banks do provide, and you have to pay for it.  But if you put your money on deposit with the expectation that it will grow, you should be prepared to take the risk that your money might be lost.

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The Financial Crisis was a Perfect Storm whose Elements are Known

Posted on September 17, 2011 by markinaustin

One of the elements of that storm was the partial repeal ofGlass-Steagall, coupled, however, with the partial repeal of the BankHolding Act [both in Gramm-Leach], and made deadly by the CommodityFutures Modernization Act of 2000 and the subsequent vacuum intowhich fell Enron’s “off the books” activities, the burgeoning ofunregulated credit default swaps backed by zero insurance reserve, andthe unregulated “securities” called collateralized debtobligations. See the various press releases from SEC, especially2001-2002, and their joint releases with the Commodities FuturesTrading Commission, to get the sense of “oh, wow, this is gonna begreat” that was pervasive.
Oneresult was government insurance of deposits in commercial banks thatcould then be leveraged in very risky and unregulated transactions. “What does seem impractical, however, are the current arrangements.Anyone who proposed giving government guarantees to retail depositorsand other creditors, and then suggested that such funding could beused to finance highly risky and speculative activities, would bethought rather unworldly. But that is where we now are.” MervynKing, Bank of England, October 2009.  

Thereare other historical elements. When we gave Citibank thevariance – the “temporary” approval – to merge with TravelersInsurance years earlier in contravention of the existing Bank HoldingAct we were playing with this fire. When we began the incrediblebipartisan push for 100% mortgages to barely qualified borrowers wewere creating tinder to be fed into the unregulated CDOs that were inheavy demand because of a tidal wave of cash looking for a home. When FanFred participated in the Goldman-Sachs model of wealthcreation we further implicated the future governmental response.
Irecognize some compelling arguments for looking elsewhere. See
Again,consider the banks in western countries that were NOT shaken to theirroots, that were not crying for bailouts. “Canada’s experienceseems to support those who say that the way to keep banking safe isto keep it boring — that is, to limit the extent to which banks cantake on risk.” The dreaded Krugman, 2-1-10
Iconcede that is an argument for regulating risk taking, not forregulating the wall between “commercial” and “investment”banking, per se. However, the contribution from tearing down thatwall is that investment banking runs a far chancier, and more global,set of risks than is required for good lending practices. The set ofrisk averse regulations historically applicable to lendinginstitutions would stifle an investment banker. Even now we see theindustry fighting against maintaining mere ten per cent in reserves. I remember when 18% was typical for a local bank.
Ipose that separation would be a net good and reduce future risk inthe way suggested by Mervyn King.
Fora world class primer on line refer to:
This is conveniently found through the “baselinescenario” link on the right of your page.

 I’m outta here!  At least, for now.  Hook ’em Horns! 

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Morning Open Thread (Saturday)

Posted on September 17, 2011 by okiegirl

Morning, all. Sorry I missed yesterday completely. My work day totally exploded and I worked late and then tumbled straight to bed. Some days are just like that.

I have nothing more important on my mind yet than coffee, and I have not yet had a chance to partake of that or to review all of the posts from yesterday. What a great way to spend my early Saturday morning!

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Bits & Pieces-End of Day Open Thread

Posted on September 16, 2011 by lmsinca

One more piece of the picture of the Obama Administration as routinely practicing all the forms of impropriety and graft of which Democrats used to accuse the Bush/Cheney Administration is this story about the WH pressuring an Air Force General to change his testimony to be more favorable to a large Democratic Party donor’s business interests.

Speaking of Ponzi schemes. [While this blog is still private, I’ll note that I was born and raised not far from there and know this community pretty well. This comes as no shock to me.–QB]

Speaking of Michael J. Fox (which we were, earlier today), do you folks know that Nike has made a limited run the Nike Mag shoes from 2015 that Marty McFly wore in Back to the Future II?

They are being auctioned off for a good cause. If you have $2000 or so to spare for a pair of shoes, you should buy some.

[What? It’s the end of the day.–KW]

[Question: how do I add the cute little line separating QB’s and Kevin’s posts?–Michigoose]

[Answer: Dip into HTML mode and type <hr>. Then come on back.

Testing out dropping in a link and comment to this post. . . and this is something that’s been on my mind for several years now. We were told that we had to fight the terrorist “there” so we wouldn’t have to fight them “here”, but I would argue that the fight is indeed on our own soil and we’ve brought it here ourselves. So many of the things that we deal with on a daily basis are predicated on preventing another terrorist attack: taking our shoes off to go through scanners at the airport and not being able to carry a sealed bottle of water onto an airplane; cops with semi-automatic weapons on the streets of New York; reporting a box sitting on a park bench to the bomb squad; looking askance at tourists taking pictures of buildings. We’ve been trained to be on constant alert, wary of the “other”, rather than enjoying a walk around the streets of downtown.
Now, apparently, it’s starting to affect how some people think we should build our infrastructure:
http://www.washingtonmonthly.com/political-animal/2011_09/living_in_fear032251.php We pride ourselves on being the most powerful nation on earth, and yet we live like we can be destroyed at a moment’s notice. I’m not trying to be a Pollyanna or insist that everybody likes us, they really, really like us, but I don’t think that we’re at constant risk, and how do we get that feeling back as a nation?

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Timmy Tells the Bundestag: Halt’s Maul!

Posted on September 16, 2011 by Kevin S. Willis

[that means STFU in German (a maul is an animal mouth, surviving in English as maw)]

US Treasury Secretary Timothy Geithner has warned European leaders to stop the “loose talk” about divisions over how to solve the eurozone debt crisis, the Dow Jones news agency has reported. Speaking at a closed meeting of eurozone finance ministers in Poland, he is reported to have told them that the divisions were “very damaging”. The eurozone ministers delayed a decision on Greece’s next bailout loan.

Yet they did announce tougher economic governance rules. Set to come into force for all nations in the European Union (EU) from October, they will make it easier for states to be punished for overspending. Mr Geithner reportedly said: “What’s very damaging is not just seeing the divisiveness in the debate over strategy in Europe but the ongoing conflict between countries and the [European] central bank.”

He said that “governments and central banks need to take out the catastrophic risk to markets”. BBC

Sounds like a Labor thug! The unhinged will go off!. Timmy is advocating wanton violence against catastrophic risk mongers.
But seriously, some guy from the US saying, ‘don’t talk back,’ at least he didn’t say, ‘eat your peas.’ Loose talk, is that what opposition to can kicking bank bailouts is called nowadays? I’ll bet the old farts in the German Parliament are not amused.


They learned from Bismark, they wouldn’t mind a bit of catastrophic crisis, so long as they manage it through to the end game.


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Does Tipping the Scales in Your Party’s Favor Help or Hurt Good Governance?

Posted on September 16, 2011 by Michigoose

My maiden blog post. We’ll see if it generates any interest. . .

I’ve been thinking about gerrymandering and redistricting a lot lately; here in Utah we’re picking up a fourth congressional district and so, in addition to the normal horseplay that goes on (see what happened last time they redistricted and tried to gerrymander our lone Democrat out of office: http://tinyurl.com/5uj4p44. Jim Matheson is the rep for the second district, that one pin-pointed in SLC and then winding around to the east and south), they’re trying to decide whether or not to concede that the urban Wasatch front (centered on Salt Lake City) votes differently than the majority of the rest of the state and set up the new CDs in such a way that we’ll have a pretty reliably Democratic CD, with the other three being solidly Republican, or whether to try to gerrymander four Republican districts out of the state and leave Democrats twisting in the wind again. They’ve even set up a website seeking input from residents (http://tinyurl.com/64z8czp).

This also ties in with the thinking that I’ve been doing about Pennsylvania’s move to try to change the way their Electoral College votes are allocated in order to make the state less reliably blue in presidential elections (which Nate Silver isn’t at all sure would work out for Republicans in the end: http://tinyurl.com/3ow8zfn)

So here’s my question: why do we gerrymander? I understand that politics is a contact sport, and both sides try their best to tip the scales in their favor, but does that actually give us the best government for our money? One of the perennial problems here in Utah is that, because districts from state legislative on up have been so gerrymandered that one party or the other is a virtual shoe-in for the election, voter turnout is traditionally very low. This also leads to the fact that incumbents win re-election something like 90% of the time (nationwide), whether they’re really doing good work for their electorate or not. Why not create non-partisan committees in every state to do the re-districting in a geographically coherent manner? Does designing a district in such a way that it votes reliably for your candidate, regardless of the needs of the individual voters in disparate parts of the district, make for good governance?

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Earthquake in Japan

Posted on September 16, 2011 by ScottC
6.6, southeasst of Honshu.  No other details.

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Mindset vs. Dataset: The Developing World

Posted on September 16, 2011 by Kevin S. Willis

This is launched off some of Shrink’s points about China. Hi, Shrink!

I’ve pointed to this video by Hans Rosling before. Yes, I’m doing it again.I love this quote early on from the video: “The world view that my students had corresponded to the state of the world the year their teachers were born.”

The point being, I would still argue that, broadly, the developed world is dragging the developing world into the 21st century (over years, not news cycles) and that the big data points support this view. Or you could say the developing world is joining the developed world, whether or not we’re doing anything to make it happen.

Whichever way you look at it, things are much better than they were, and are likely to become much better still.

Okay, and this is tangential to my main point, but since I can’t embed videos in comments, I’m going to do it here. Hans Rosling talks about how ending poverty is crucial to controlling population growth. And it’s true: the best birth control in the world is not laughter, it’s money.

Discuss, my babies. Discuss!

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