Why should we believe the American Meteorological Society on the issue of climate change? Richard Lindzen:
Professional societies represent a somewhat special case. Originally created to provide a means for communication within professions – organizing meetings and publishing journals – they also provided, in some instances, professional certification, and public outreach. The central offices of such societies were scattered throughout the US, and rarely located in Washington. Increasingly, however, such societies require impressive presences in Washington where they engage in interactions with the federal government. Of course, the nominal interaction involves lobbying for special advantage, but increasingly, the interaction consists in issuing policy and scientific statements on behalf of the society. Such statements, however, hardly represent independent representation of membership positions. For example, the primary spokesman for the American Meteorological Society in Washington is Anthony Socci who is neither an elected official of the AMS nor a contributor to climate science. Rather, he is a former staffer for Al Gore.
- low interest rates (Alan Greenspan, in other words) - "a push to expand home ownership to borrowers who once were considered too risky" - the role of government sponsored entities like Freddy Mac and Fanny Mae
Focusing on greed is a mistake. As economist Lawrence White of the University of Missouri-St. Louis puts it, blaming greed for economic dislocations is like blaming gravity for airplane crashes: Greed and gravity are both ever-present. Wall Street traders are not more or less avaricious today than they were 10, 20 or 50 years ago.
Nor is lack of regulation the root of the problem. Among the alleged lapses is the 1999 repeal of the Depression-era Glass-Steagall Act, which forbade the mixing of commercial and investment banking. Removing that barrier, we are told, spurred commercial banks to get into such risky investments as subprime mortgages.
But Megan McArdle of The Atlantic notes, "If this were part of the problem, it would be the commercial banks, not the investment banks, that were in trouble"—which for the most part, they have not been. The demise of Glass-Steagall turns out to be a boon. Were it still around, Bank of America would not have been allowed to buy Merrill Lynch.
But if insufficient regulation was not the culprit, what was? One, noted by former Federal Reserve Chairman Alan Greenspan, has nothing to do with regulation: a "speculative surge" sparked by low inflation and low interest rates worldwide. That led to a global housing boom, which regrettably couldn’t last forever, and whose end inevitably produced casualties.
Another factor was something deregulation critics omit: a push to expand home ownership to borrowers who once were considered too risky. Economist Stan Liebowitz of the University of Texas at Dallas writes that "in an attempt to increase homeownership, particularly by minorities and the less affluent, an attack on underwriting standards was undertaken by virtually every branch of government." The result was to feed the housing bubble—and to expand the number of victims when it burst.
Then there was the big role played by mortgage giants Fannie Mae and Freddie Mac, government-sponsored entities whose failure is a testament to the dangers of mixing public and private enterprise. Conservatives had long warned that the government’s implicit backing of these companies would someday mean a big bill for taxpayers. Guess what? They were right.
When this crisis has settled down, Congress and the president are welcome to consider if the experience indicates the need for some precise and prudent changes in the law governing financial institutions. But it’s more likely a careful examination will prove that the biggest failures were ones of too much government, not too little.
The liquidity crisis isn’t real. Or, to restate it: Any liquidity crisis is caused by the promise of a government bailout. Ken said that his many friends in investment banking said that there is plenty of money to invest in financial services, but right now it is "sitting on the sidelines." Why? Because the financial services industry does not want to pay the terms required to get that money back in circulation (e.g., give up equity). As he put it, why do business with Warren Buffett who will negotiate a tough deal, if you believe that the government will ride in soon with cheaper cash?
Ken also talked about the need to shrink the financial services sector. He thinks it is good that the investment banking houses are failing and many people on Wall Street are losing their jobs because, in his view, we have an oversupply in that sector and our economy just can’t support it.
Alexander Tabarrok says we should let involvent banks fail, while supporting the solvent ones:
Banks are bridges between savers and investors. Some of these bridges have collapsed. But altogether too much attention is being placed on fixing the collapsed bridges. Instead we should be thinking about how to route more savings across the bridges that have not collapsed. Government lending may be one way of doing this but why lend to prop up the broken bridges? Instead, why not lend directly to the investors who are in need of funds? After all, if these investors exist and have valuable projects that’s where the money is! Let the broken bridges collapse, taking the shoddy builders with them. Instead focus on the finding and rescuing the victims of any credit crunch, the investors who need funds.
The TED spread is high, the T-Bill yield is low, banks are disappearing, etc. It sounds grim and it is grim. The "bright side," if I may call it that, is that the financial sector really does need to shrink. It is doing so at an accelerated pace. That is one problem from having so many derivatives markets but it is also their virtue. There may be speculative swings in price but when reality arrives you can’t run away from it. And a high TED spread can be a good thing too, forcing banks to shrink or consolidate or shed assets. Bank consolidation raises profits and allows retained earnings to finance activity in the former losers. If there is any consolation, this is not Japan of the 1990s, which was the original worry of many people.
The bumps may yet destroy the sled, but what appears to be bad news can in fact turn out to be good news.
Economists are protesting against the plan of Treasury Secreatry Paulson:
As economists, we want to express to Congress our great concern for the plan proposed by Treasury Secretary Paulson to deal with the financial crisis. We are well aware of the difficulty of the current financial situation and we agree with the need for bold action to ensure that the financial system continues to function. We see three fatal pitfalls in the currently proposed plan:
1) Its fairness. The plan is a subsidy to investors at taxpayers’ expense. Investors who took risks to earn profits must also bear the losses. Not every business failure carries systemic risk. The government can ensure a well-functioning financial industry, able to make new loans to creditworthy borrowers, without bailing out particular investors and institutions whose choices proved unwise.
2) Its ambiguity. Neither the mission of the new agency nor its oversight are clear. If taxpayers are to buy illiquid and opaque assets from troubled sellers, the terms, occasions, and methods of such purchases must be crystal clear ahead of time and carefully monitored afterwards.
3) Its long-term effects. If the plan is enacted, its effects will be with us for a generation. For all their recent troubles, America’s dynamic and innovative private capital markets have brought the nation unparalleled prosperity. Fundamentally weakening those markets in order to calm short-run disruptions is desperately short-sighted.
For these reasons we ask Congress not to rush, to hold appropriate hearings, and to carefully consider the right course of action, and to wisely determine the future of the financial industry and the U.S. economy for years to come.
I have no doubt this will play in Michigan – but the ad has a different effect on your humble blogger:
The ad that Obama’s willing to give out loan guarantees to Detroit. Question to Obama’s economic team — are there any industries you are not going to offer a federal handout? And no, oil doesn’t count.
My Democrat friends keep insisting that Obama doesn’t mean any of his protectionist rhetoric. But how many ads about “shipping jobs overseas” does it take for one to wonder about Obama’s foreign economic policy?
This ad actually brings up one of the few actual “straight talk” moments for McCain in this campaign — when he told Michigan auto workers that he wasn’t going to be able to bring their jobs back.
One of the side benefits of the widening number of swing states is that the rust belt starts to matter less. Which means that maybe in another election cycle or two protectionist pandering like this becomes less necessary.
markets work because they are unregulated, or have been able to work deftly around regulations, just as free trade works - and makes the world richer, and less susceptible to anti-democratic regimes - because it is free. Only political faith is enough to convince people that individual governments are smart and nimble to introduce regulations that are enforceable in an open, international economy.
what all of this points out is that laying the finger of blame on "the free market" is utterly in error, but it’s an error that’s going to get made continually over the months and years to come. If there’s one thing those of us on this side of the battle of ideas can do as this all unfolds, it’s to do whatever we can to remind people that the interventionist economy that caused the problems and led to privatized profits and socialized losses (and the "solutions" that will further socialize losses) are NOT "the free market." Asking why anyone would think bigger government will solve these problems when it was the major cause is another public service we can provide.
In de Finse stad Kauhajoki heeft een wilde schutter 9 jongeren neergeschoten in een school (...). De schutter probeerde daarna zelfmoord te plegen, maar dat mislukte. De jongen is intussen overmeesterd.
De jongeman viel vanochtend een beroepsschool binnen in de westelijke stad Kauhajoki, zo’n 350 kilometer van de hoofdstad Helsinki. Volgens verschillende bronnen opende hij daar het vuur. De Finse premier Matti Vanhanen bevestigt dat er daarbij negen jongeren zijn omgekomen. Twee anderen raakten gewond.
De dader probeerde daarna zelfmoord te plegen, maar dat mislukte. Hij is zwaargewond en kon door de politie overmeesterd worden. De dader is een jongen van 20 jaar oud. Hij zou alleen hebben gehandeld. Hij was gisteren nog ondervraagd door de politie, maar daarna vrijgelaten. Dat gebeurde nadat de jongeman met een pistool was verschenen in een video op de site YouTube (...).
In Finland wordt geschokt gereageerd op de schietpartij. Nog geen jaar geleden had een 18-jarige jongen ook al eens 8 mensen doodgeschoten in het appartementsgebouw waar hij woonde.
All teachers of natural law, etc., have unanimously declared that the differentiation into income-receiving classes and propertyless classes can only take place when all fertile lands have been occupied. For so long as man has ample opportunity to take up unoccupied land, "no one," says Turgot, "would think of entering the service of another"; we may add, "at least for wages, which are not apt to be higher than the earnings of an independent peasant working an unmortgaged and sufficiently large property"; while mortgaging is not possible as long as land is yet free for the working or taking, as free as air and water. Matter that is obtainable for the taking has no value that enables it to be pledged, since no one loans on things that can be had for nothing.
The philosophers of natural law, then, assumed that complete occupancy of the ground must have occurred quite early, because of the natural increase of an originally small population. They were under the impression that at their time, in the eighteenth century, it had taken place many centuries previous, and they naively deduced the existing class aggroupment from the assumed conditions of that long-past point of time. It never entered their heads to work out their problem; and with few exceptions their error has been copied by sociologists, historians and economists. It is only quite recently that my figures were worked out, and they are truly astounding.
(...)
Apply the same process to countries less densely settled, such, for example, as the Danube States, Turkey, Hungary and Russia, and still more astounding results will appear. As a matter of fact, there are still on the earth’s surface, seventy-three billion, two hundred million hectares (equal to one hundred eighty billion, eight hundred eighty million and four hundred sixteen thousand acres); dividing into the first amount the number of human beings of all professions whatever, viz., one billion, eight hundred million, every family of five persons could possess about thirty morgen (equal to eighteen and a half acres), and still leave about two-thirds of the planet unoccupied.
If, therefore, purely economic causes are ever to bring about a differentiation into classes by the growth of a propertyless labouring class, the time has not yet arrived; and the critical point at which ownership of land will cause a natural scarcity is thrust into the dim future - if indeed it ever can arrive.
As a matter of fact, however, for centuries past, in all parts of the world, we have had a class-state, with possessing classes on top and a propertyless labouring class at the bottom, even when population was much less dense than it is today. Now it is true that the class-state can arise only where all fertile acreage has been occupied completely; and since I have shown that even at the present time, all the ground is not occupied economically, this must mean that it has been pre-empted politically. Since land could not have acquired "natural scarcity," the scarcity must have been "legal." This means that the land has been pre-empted by a ruling class against its subject class, and settlement prevented. Therefore the State, as a class-state, can have originated in no other way than through conquest and subjugation.
What, then, is the State as a sociological concept? The State, completely in its genesis, essentially and almost completely during the first stages of its existence, is a social institution, forced by a victorious group of men on a defeated group, with the sole purpose of regulating the dominion of the victorious group over the vanquished, and securing itself against revolt from within and attacks from abroad. Teleologically, this dominion had no other purpose than the economic exploitation of the vanquished by the victors.
New York heeft maandagavond (plaatselijke tijd) het BASE-jumpen verboden. De maatregel moet ervoor zorgen dat de hulpdiensten in de stad alleen ingezet hoeven worden bij echte noodgevallen, liet het kantoor van burgemeester Michael Bloomberg in een verklaring weten.
De afkorting BASE staat voor Building, Antenna, Span en Earth (gebouw, antenne, overspanning en de aarde). Dit zijn de vier objecten waar vanaf gesprongen wordt. Een sprong duurt maar een paar secondes en de waaghalzen hebben geen reserveparachute. Daarom eindigen zulke sprongen geregeld in de dood.
Als de Organisatie voor Duurzame Energie (ODE) stelt dat we puur technologisch gesproken in staat zijn om volledig op basis van hernieuwbare energie onze elektriciteit te produceren, dan is dat waar. Radicaal gaan voor hernieuwbare energie is technisch mogelijk, maar zal zeer duur zijn. Zeker voor een land als België. Een studie in opdracht van de Europese Commissie berekende bijvoorbeeld dat indien de verplichte Europese doelstelling van 20% hernieuwbare energie tegen 2020 over de lidstaten op een kosteneffectieve manier zou worden verdeeld, België de laagste doelstelling van de EU-27 dient te aanvaarden.
the British entrepreneur Richard Branson has offered a $25 million dollar prize to anyone who demonstrates a device that removes carbon from the atmosphere — what if the U.S. government upped the ante to $1 billion and pledged to make any resulting technology freely available to the world? That would hold the potential for solving any global warming problem that might develop to a one-time cost of less than 0.01% of U.S. GDP.
Privateering became outlawed not because it was inefficient but because it was too succesfull:
Privateering provided profitable opportunities to shipowners and merchants whose revenues from normal commercial activity were greatly diminished due to the state of war. Privateering also provided an effective means of waging war, by disrupting the flow of essential goods to the enemy nation. Why, then, did privateering more or less come to an end in the middle of the nineteenth century? Was privateering an archaic practice that remained viable only as long as there were saildriven, wooden ships carrying muzzle-loading cannon? The answer to the latter question is no. The reason is twofold. First,
technological advances played absolutely no immediate, direct role in the demise of privateering. . . .privateering essentially ended before the American Civil War. . . . The major changes in naval technology all occurred later.
Second, commerce raiding has continued to be an important facet of naval warfare to the modern day. One might note, for example, that Germany employed surface raiders to great effect during both world wars. It is also intriguing to consider that the German submarine tactics of those wars, which inflicted so much damage on Allied shipping, may have been explicitly patterned after the methods of eighteenth- and nineteenth-century privateers. Of course, in those German cases, the raiders were public naval vessels for whom there was no profit incentive. Therefore, they destroyed the enemy’s merchant ships and their cargoes instead of capturing them.
Privateering was not a worthless anachronism. It was a powerful method by which maritime nations could discourage aggressors without indulging in the massive public expenditures needed to maintain a large public navy. Indeed, it was, on occasion, publicly acknowledged to be more effective than public navies. For example, during the Federalist Era, many American congressmen were openly skeptical of having a taxsupported national navy because they thought private armed ships to be a superior option. The fact is that privateering disappeared precisely because it was so effective. Career naval officers feared and resented the competition it represented, and those few nations with large public navies wanted to make sure that smaller nations could not challenge their domination via the less costly alternative of private armed ships.
These were the primary motives behind the Declaration of Paris, signed by seven maritime nations in 1856, which prohibited privateering by the signatories and greatly hastened its ultimate end.
(...)
Historians, even those who specialize in legal or maritime issues, have paid rather little attention to privateering. Economists have almost entirely ignored it, which is particularly unfortunate. This topic offers insights into how private firms can supply defensive services, and it deserves to be investigated further. However, one thing seems clear already. The long, successful history of privateering disproves the claim that national defense is a public good, if one takes that claim to mean that governments must monopolize the market for defense.
For a time Ouédraogo worked with a farmer named Yacouba Sawadogo. Innovative and independent-minded, he wanted to stay on his farm with his three wives and 31 children. "From my grandfather’s grandfather’s grandfather, we were always here," he says. Sawadogo, too, laid cordons pierreux across his fields. But during the dry season he also hacked thousands of foot-deep holes in his fields—zaï, as they are called, a technique he had heard about from his parents. Sawadogo salted each pit with manure, which attracted termites. The termites digested the organic matter, making its nutrients more readily available to plants. Equally important, the insects dug channels in the soil. When the rains came, water trickled through the termite holes into the ground. In each hole Sawadogo planted trees. "Without trees, no soil," he says. The trees thrived in the looser, wetter soil in each zai. Stone by stone, hole by hole, Sawadogo turned 50 acres of wasteland into the biggest private forest for hundreds of miles.
Using the zaï, Sawadogo says, he became almost "the only farmer from here to Mali who had any millet." His neighbors, not surprisingly, noticed. Sawadogo formed a zaï association, which promotes the technique at an annual show in his family compound. Hundreds of farmers have come to watch him hack out zai with his hoe. The new techniques, simple and inexpensive, spread far and wide. The more people worked the soil, the richer it became. Higher rainfall was responsible for part of the regrowth (though it never returned to the level of the 1950s). But mostly it was due to millions of men and women intensively working the land.
Last year Reij made a thousand-mile trek across Mali and then into southwestern Burkina with Edwige Botoni, a researcher at the Permanent Interstate Committee for Drought Control in the Sahel, a regional policy center in Burkina. They saw "millions of hectares" of restored land, Botoni says, "more than I had believed possible." Next door in Niger is an even greater success, says Mahamane Larwanou, a forester at Abdou Moumouni Dioffo University in Niamey. Almost without any support or direction from governments or aid agencies, local farmers have used picks and shovels to regenerate more than 19,000 square miles of land.
"Al 20 jaar wordt Wallonië bestuurd door de meest archaïsche socialisten van Europe. Ze zijn niet geëvolueerd zoals in Groot-Brittannië, Spanje of Duitsland. Ze blijven kampen met hun problemen: cliëntelisme, affaires, aanvallen op bedrijven..." Dat zegt Didier Reynders.
Volgens Didier Reynders blijft de PS "geld geven aan de Walen om vis te kopen in plaats van hen te leren vissen". Net op het moment van de Waalse Feesten zegt Reynders dat die "in beslag genomen worden door de PS, met een minister-president die weigert in debat te gaan met de voorzitter van de MR."
Waalse schuld
"De toespraken zullen gegeven worden door drie socialisten in naam van alle Walen. Ze vergeten dat twee derde van de Walen geen socialisten zijn. Dat zijn praktijken uit de tijd van de Berlijnse Muur. Dit is de Sovjetstaat van toen."
Didier Reynders schat de Waalse schuld van intussen op een bedrag tussen de 8 en 10 miljard euro. "Terwijl de financiële toestand van Wallonië verslechtert, heeft Vlaanderen zijn schuld weggevaagd. Dat is onze realiteit", benadrukt Reynders. En over het Marshallplan? "Een oubollig plan waarvoor de Walen niet echt betrokkenheid tonen."
Gallup Poll Daily tracking from Wednesday through Friday finds Barack Obama maintaining his lead over John McCain among registered voters, by a 50% to 44% margin. (...) Obama has held at least a small margin over McCain in each of the last four daily reports, generally coincident with the start of the Wall Street financial meltdown that began to dominate the news on Monday this past week. Separate Gallup consumer confidence tracking has shown that Americans’ views of the economy deteriorated as the week progressed, and that Americans also began to express increased personal worry about their own finances. There is thus a reasonable inference that Obama’s gains may, in part, be related to the way in which the public viewed his and McCain’s response to the financial crisis.
The credit crisis hasn’t just been an embarrassment for apologists for actually-existing capitalism. It’s also highlighted a woeful fact pointed out by Nigel - that the left has for years had little interest in economics. The result has been that lots of lefties have called for new ideas (or a reassertion of old ones) without actually proposing them. So, to kick things off, here are some suggestions. These aren’t intended as firm policy proposals, but for directions to think in. 1. Don’t presume that regulation of individual banks is the answer. If Dick Fuld and John Thain didn’t know how to keep Lehmans and Merrills afloat, why should regulators have been able to do so, given that these always know even less than bosses, and face weaker incentives? Regulation always has unforeseen effects; it might be that one form of regulation helped cause the current crisis. Regulation of the entire system might be improved. But even this accepts what should be questioned - the existing capitalist structure. 2. This is - in part - a failure of ownership. Dispersed shareholders can’t control chief executives sufficiently, and bosses can’t control trading desks. The left should therefore ask: in what circumstances is stock market quotation a sensible ownership structure? Mightn’t other modes of ownership - partnerships, mutuals, co-ops, whatever - be more efficient? 3. In nationalizing Fannie, Freddie and AIG, the Bush administration has shown that there are no principles of liberty or justice that rule out nationalization. Efficiency trumps property rights. The left might take the hint. 4. Bosses are chancers and rent-seekers. Multi-million pound salaries are not rewards for rare skill, not the price that must be paid for “good management.” If Thain and Fuld couldn’t even keep their firms alive, might it be that management skill is an illusion? The left should question the legitimacy of the boss class. This doesn’t just mean recognizing that one argument against low taxes on the rich is now weak. It means questioning their right and ability to control big organizations. 5. Recognize that markets have a role. The state cannot - and perhaps (pdf) should not - manage the economy to remove all fluctuations. What it should do is help protect people from the consequences of downturns. And this could well mean adopting Robert Shiller’s proposals for macro markets. This crisis has been the result of misdirected financial innovation, not of markets inherently. 6. If the state can spend billions bailing out banks, it can spend billions bailing out people too. If a big welfare state is good enough for capitalists, it’s good enough for workers. Standard arguments against welfare states - that they are expensive, dampen incentives and that people should stand on their own two feet - have been gravely undermined. 7. The response of the Bush administration to the crisis show that the capitalist class will pay any price, bear any burden and ditch any principle in order to protect its own. Again, the left should take the hint. Yes, none of these ideas are immediate solutions. But they’re not meant to be. Hasty policy is usually bad policy. And I suspect the immediate material effects of the current troubles - less availablity of credit and an economic slowdown - will now be cured by the passage of time. The longer-lasting, deeper effect of this crisis is that it’s undermined capitalist ideology. The left not only should respond to this. It can.
