36 Comments

1. Dave:

Totally off rhinoceros here; beg your pardon, Wretchard.

Does anybody on this thread live in or around Cincinatti, Ohio?

If so, the 82nd Fighter Group will be holding its reunion at the Holiday Inn Cincinatti Airport (actually in Erlanger KY) 1 Oct thru
4 Oct. For anybody available, this is a good chance to meet a crazy bunch of P38 fighter pilots and even one Messerschmitt Ace from the other side. Various and sundry things going on with the banquet being Saturday night the 4th.

I’ll be happy to spring for your dinner that night, you can buy your own booze.

Remember that OODA loop? These guys lived it.

Sep 27, 2008 - 9:26 pm 2. Charles:

Washington Times
Michelle Malkin
Sunday, September 28, 2008
Illegal immigrant factor
http://www.washingtontimes.com/news/2008/sep/28/illegal-immigrant-factor/
It’s no coincidence that most of the areas hit hardest by the foreclosure wave – Loudoun County, Va., California’s Inland Empire, Stockton and San Joaquin Valley, and Las Vegas and Phoenix, for starters – also happen to be some of the nation’s largest illegal alien sanctuaries. Half of the mortgages to Hispanics are subprime (the accursed species of loan to borrowers with the shadiest credit histories). A quarter of all those subprime loans are in default and foreclosure.

Sep 27, 2008 - 9:44 pm 3. Derek:

Environmental politics never survive an economic downturn.

If the banks fail, or a worldwide recession hits, environmentalists will be as common as a brick throwing protester after 9/11.

Derek

Sep 27, 2008 - 10:36 pm 4. mika.:

During a visit to the mental asylum, a visitor asked the Director how he determines whether a patient should be institutionalized. ‘Well,’ said the Director, ‘we fill up a bathtub, then we offer a teaspoon, a teacup and a bucket to the patient and ask him or her to empty the bathtub.’ ‘Oh, I understand,’ said the visitor. ‘A normal person would use the bucket because it’s bigger than the spoon or the teacup.’ ‘No.’ said the Director, ‘A normal person would pull the plug.’

Sep 27, 2008 - 10:55 pm 5. Therapist:

OLD SALT,

It’s ok to get it off your chest and socialize your problems with friends. Soon we will all have district and block therapits’ aiding each of us by having us point out those who show too much individualism.

Who do you know that might be against that system? We’ll help you and them.

We’ve actually been quite successful for decades. We have 100% of parents telling their children to share. If the child hesitates the child is scolded and told they must “share”

Comrade, “sharing is caring”.

This weeks schedule calls for you to share your car with a homeless person who lives under the 103rd street overpass. Let me have your car keys and $50 dollars for gas money.

As the block therapists this will look good on my weekly report about you. Your keys now.

Sep 27, 2008 - 11:19 pm 6. NahnCee:

Therapist, you do realize you’re trolling, don’t you?

Sep 27, 2008 - 11:32 pm 7. Habu:

…just like I said

A threat bigger than Wall St

IRAN is a problem from hell. The next US president, be it Barack Obama or John McCain, is going to have plenty to worry about: the Wall Street financial crisis, the war in Afghanistan, Pakistan’s internal crisis, the relentless military build-up of China and the temptation it will soon have of trying to retake Taiwan militarily. But you can be sure of this. At some stage during the next presidency, Iran will blow up into a full-scale crisis that will dominate global politics and that may indeed be more important even than the other problems listed above.
The new president will have one modestly useful extra resource, a bipartisan report commissioned by two former US senators and written primarily by Middle East expert Michael Rubin of the American Enterprise Institute. The Weekend Australian has obtained a copy of the report, to be released later this week. Before I got the report, I had a long discussion with Rubin.

http://tinyurl.com/3ug6nr

Sep 27, 2008 - 11:35 pm 8. NahnCee:

Affirmative action is another one of those lucrative programs tht everyone was urged and demanded to get with. Many people think that its time has passed, and the program should be dispensed with. Oddly enough, however, even though it’s been voted down and out and adjudicated to be illegal, many *other* people are bound and determined to maintain affirmative action as a thriving program.

Why, it’s almost like there’s a secret 3rd column of provocateurs bent upon thinking up, supporting and maintaining programs like the Koyoto treaty, carbon footprints, affirmative action, and Y2K scams to the deliberate detriment of the rest of society. Now who could possibly be so evil (or ignorant) as to support basically anti-human programs like those being mentioned?

Sep 27, 2008 - 11:38 pm 9. wretchard:

There’s nothing wrong in principle with trying to help the poor but the problem is that in practice much of the “help” winds up trapping the so-called beneficiary. Environmentalism has become an anti-Third World program and I fear the subprime fiasco has ruined and permanently indebted many a “beneficiary”.

One senior Australian politician told the guests at a dinner I attended that he was in an Aboriginal area and spoke to one of the elders, who was his personal friend. They were sitting on a rock somewhere and the politician asked the Aboriginal elder what needed to be done to fix the horrible situation: the drunkenness, lassitude and human waste that were the reservations, set up so that they could be “close to the land”. The Aboriginal elder turned to him and said, “start treating us like white fellas”. They were being condemned to an ethnographic museum.

Of course to say this in public would be to invite a storm of opprobrium. But therein lies the problem.

Sep 27, 2008 - 11:51 pm 10. Pascal:

“Environmentalism has become an anti-Third World program [(big e.g.: DDT bans)] and I fear the subprime fiasco has ruined and permanently indebted [enslaved] many a ‘beneficiary’….

…Of course to say this in public would be to invite a storm of opprobrium.”

Sep 28, 2008 - 12:01 am 11. mika.:

Environmentalism has become an anti-Third World program and I fear the subprime fiasco has ruined and permanently indebted many a “beneficiary”.
==

Nonsense.

Environmentalism means breaking the dependence on the oil mafia. It means energy independence. It means economic independence. It means geopolitical independence.

Sep 28, 2008 - 12:01 am 12. 2x4:

Git your head out of yer a$$, Mika!

(If I seem rude, it is just an appearance – sometimes nothing than two x four method helps a fellow human being. I do it for the love of humanity! )

Sep 28, 2008 - 2:10 am 13. Charles:

I have read that a lot of the original money that Sarah Palin got to run her first campaign came through her husband’s alaskan tribe. My guess is that they get a lot of oil revenues. A guy I know in Pennsylvania has family among the tribes in the Aleutians. Alaskan oil revenues flow to him. Other American tribes set up gambling casinos. The Hawaiians want to push this to the extreme. They have pushed a lot of money into the Obama campaign because they believe that if he wins the Akaka bill will go through congress. That bill will treat all of the hawaiian islands as something like a reservation and give anyone with hawaiian ancestry a right through a governing hawaiian authority — to seize property.

imho this will lead to the crack up of the United States.

Sep 28, 2008 - 2:39 am 14. Ron Hardin:

In 1987 there was portfolio insurance, where by simultaneously buying and selling in two markets, nobody could lose money.

Of course they discovered that you can’t always simultaneously trade in two markets. One of them closed until everybody had lost enough money for it to open again.

Structured investment vehicles are safe because not all the mortgages will fail at once. Of course they do. The theory assumed they failed independently, so the diversification reduced the total risk. Which was wrong.

Common sense prevails by violating an assumption.

Sep 28, 2008 - 2:56 am 15. Ron Hardin:

Senator Chris Dodd on Imus Sep 27 link escapes blame by being very angry.

You’d think a fighter pilot would turn inside him easily.

Sep 28, 2008 - 3:51 am 16. Sam:

wretchard:
There’s nothing wrong in principle with trying to help the poor but the problem is that in practice much of the “help” winds up trapping the so-called beneficiary.

True enough, but there is another factor. A great deal of the funding of these programs is spent hiring people to run them. Now a liberal likes nothing better than a government job where he/she gets to tell people how to live and the last thing they want is for people to get out of the program.

Sep 28, 2008 - 5:26 am 17. Leo Linbeck III:

Humans are social beings with bounded rationality. I cannot possible know everything through personal experience, so I rely on others to fill in the holes. These two facts lead to bubbles.

During the internet bubble, I saw this happen. Millions bought internet stocks for the simple reason that everyone was buying internet stocks; all the cool kids are doing it, man. And surely, somewhere, someone had done a discounted cash flow analysis upon which these crazy valuations could make sense, right? But the leading internet analyst of the day said, basically, I can’t make sense of these valuations; still, surely, somewhere, someone had figured it out because markets are always right. So the argument was circular.

We have created a culture that belittles hard work and glorifies consumption – and the worst is hip-hop. Magazines and music tell us that we should buy, eat, drink, travel, and boink like P Diddy, Paris, 50-Cent, et. al.

One day, our co-worker shows up with a BMW, and we wonder how he afforded it since he makes the same salary as me. He tells you that he bought a condo using a sub-prime mortgage, and flipped it in 6 months, and he used the profits to by the Beemer. “Consumption without the work? Gosh, I feel like a putz. And I’m smarter than Beemer-boy; I should be able to do that too!” More people pile in, and at each stage this growth validates the model (”All these people can’t be stupid.”)

At the end, it must all come crashing down, and the “hares” who tried to game the system look like a bunch of idiots. Meanwhile, the “tortoises” who work hard and save their money and build their 401(k)s look at all this and shake their heads as the “hares” cry a river of tears.

But the nagging question at the back of the mind of the “tortoise” is: how many of me are there? Has the culture become so corrupt that there are a lot more “hares” than “tortoises”? Because if there are a lot more “hares” then this whole thing could collapse. Collapse means I lose my job, my savings when my bank fails, and my 401(k) when the stock market crashes. I’ll only be left with a big bucket of jack squat, driving a late-model Pontiac while Brer Rabbit is still styling in his BMW: “Now who is the putz, turtle-boy?”

So, we have a crisis of confidence. But at the core of a crisis of confidence is a crisis of faith. Faith in the future, faith in your fellow man, faith in God. I believe that faith is still there in the US, and that faith – not some mortgage bail-out legislation – is what will save us. That faith will manifest itself as the steely nerve of the average family, hunkering down, cutting its consumption to adjust to the downturn, but keeping on keeping on. And going to weekend services.

If I was a betting man, I’d bet on another Great Awakening before I’d bet on another Great Depression.

L3

Sep 28, 2008 - 6:31 am 18. Dave in NC:

We’ve survived wars and crashes; 1812, Civil war (War of Northern Aggression), crahs of 1870’s, WWI, 1929 and Great Depression, WWII, Black Friday. Americans will do what we’ve always done; we’ll survive.

Sep 28, 2008 - 7:23 am 19. mika.:

I do it for the love of humanity!
==

2×4,

I’m guessing you got the bed by the window.
(See: Sep 27, 2008 – 10:55 pm)

Sep 28, 2008 - 7:25 am 20. Paul:

Sam- I believe you’ve hit the nail,er problem on the head. The lubricant that moves many a social program is the money being made by the social welfare bureaucracy, and associated NGO’s, and foundations that assist the program. The only difference with the Subprime crisis is that Wall Street, the mortgage bankers and mortgage brokers got to get in on the act too.

But of course the social welfare state con was too profitable to be ignored by Wall Street for long.

Sep 28, 2008 - 7:51 am 21. slade:

“Now who is the putz, turtle-boy?” – LL3

Boy did you nail it. The raw rage sits in my stomach like a white hot knot that won’t go away. One day I think the proposed plan is necessary to take the edge off for the larger body of people, but the next day I am convinced it is the biggest scam of this century and we aren’t out of the first decade. Who thought search for the truth could be so, existential, finding god in an accountant’s revenue streams.

I thought about it some more overnight and that video – giving recorded sight and sound to the repeated 2004/2005 warnings raised in Congress; giving face to the outrage of self-righteous hypocrisy wrapped in a cloak of moral superiority of people who weren’t afraid to defend and protect “a fine man” – it’s all true. I thought maybe some exaggeration for political traction magnified by the microphone, but there it is. I don’t for the life of me understand how McCain can lose with the timing of a crisis having a history of warnings that were met with a willful refusal to act. (I’m going to call it the Ted Stevens Factor in honor of the Alaska Republican who had to be removed with the Jaws of Life.) Unless one thinks the events are synthetic – manufactured for consumption. In which case I’ll take the bed by the window.

I won’t go down the End of Empire road. I am too nice a person to be apocalyptic by nature. This is a mechanical problem that can be fixed with attention – and expertise(!!!) – both of which lacking. It’s too bad we can’t find analogues of Wall Street investment bankers to deal with Iran. He’d be toast by now.

Sep 28, 2008 - 8:14 am 22. slade:

A great deal of the funding of these programs is spent hiring people to run them. – Sam

Remember the United Way scandal from 10-15 years back when the national director was forced to resign because administrative fees encroached on charitable pool. I don’t remember the numbers without looking it up but essentially the country’s largest charity was slapped for growing into nothing but a self-sustaining bureaucracy. (Every public agency and private company I have worked for had a formal United Way contribution program with varying levels of pressure depending on your place in the pecking order.) Same thing for too many of these NGO’s.

Sep 28, 2008 - 8:26 am 23. E. Nigma:

Moral outrage.

Faith and trust.

There is no dollar value on those meta-physical items. The financial ‘wizards’, political altruists who created CRA and the like, and the clever ‘hares’ that played the system among us, that have led us down the road to this crisis, will not suffer too much moral pain from the outcome. There will be no moral lesson applied to them. The same practices will continue until a true disaster arrives. They can’t help themselves. Popular democracy has empowered them, and popular culture is their self-justification.

It’s not necessarily “hatred of America”, “social justice” or any other similar nonsense. It is more in the nature of self-immolating narcissism, which explains the popularity of the most popular narcissist of the year, Barack Obama.

That’s what pains us, more than the financial burden or worry. There will be no moral lesson learned by the perpetrators, so that yes, history will repeat itself, probably in short order.

Sep 28, 2008 - 8:36 am 24. dla:

I’m a little bit ticked that the Wikipedia entry quotes a bad study suggesting that the CRA was actually “good”.

The study, authored by legal-slime-rodents, fails to address the central question haunting the “Community Reinvestment Act” – Did loans made by CRA banks default at a higher rate than non-CRA banks?. Simple question really, but they dodged it.

I submit that this supposed altruism by Congress and Obama is the primary cause of the financial crisis. What bothers me is that neither Obama or McCain seem inclined to address the role of the CRA – it seems like it would be in McCain’s favor.

Sep 28, 2008 - 8:42 am 25. slade:

There’s empire and then there’s empire:

How China Created a new Slave Empire in Africa

[h/t Glenn Reynolds]

Sep 28, 2008 - 9:37 am 26. NahnCee:

Wretchard, are laws in Australia so restrictive tht Aborigines can’t get up in the morning, go to a job, and work to help themselves?

Sep 28, 2008 - 10:23 am 27. Paul:

Habu- A good link. To me, one of Mc Cain’s low points in the debate was when he failed to mention that military action may be necessary to deal with Iran. He left the impression to the unthinking uninitiated in the Iran debate that all we had to do was have some better sanctions to stop Iran from getting the bomb. And with Britain using, and EU considering ,Sharia Law now in civil cases, I kinda doubt the Brits and the Yurps would really be very helpful anyhow.

Sep 28, 2008 - 11:32 am 28. Leo Linbeck III:

slade,

I’m with you, bro. No End of Empires for me. I carry around a copy of the Declaration of Independence and Constitution in my coat pocket to remind me how special, how rare, how wonderful is the Great American Experiment.

But experimentation involves risk; sometimes you add a chemical and the damn beaker explodes like Mentos in a Diet Coke. We gotta just clean up the mess, figure out what we did, and keep trying.

My read of the meta-situation is that we’re overdue for a consumption correction. Not that we’re going to move back into caves and go on daily hunts; but we’ll keep our cars a couple of extra years, fix up the house we’re in rather than buy a new one, forgo that new plasma for a few more years, and shop at Men’s Wearhouse instead of Neiman Marcus. And if we’re really good, instead of that trip to Las Vegas, we’ll drive to Gettysburg and remind ourselves the sacrifice that was made, the price that was paid to assure that the experiment can continue.

One other comment about consumption. The relationship between consumption and happiness is not what most folks think it is – increased consumption results in increased happiness. Rather, it is an inverted U – something I call (immodestly) The Linbeck Curve. More consumption makes us happier for a while, but eventually it peaks and happiness actually decreases with additional consumption.

There is intriguing empirical evidence for the Linbeck Curve as well. The point on the far right below the curve is the US. Note also that this is per-capita income; our consumption is probably higher since IIRC we’re in a negative savings mode. So, it may be that, for the first time in human history, we have reached the point where more consumption as a nation makes us less happy.

We may be entering a phase when our consumption will shrink. If it does, and our productivity and output continue to grow, it won’t take long to pay off all of our public and private debt. We can replenish our national “equity” by increasing our savings, and assure our economic strength for years to come.

The other road before us is to avoid risk by slouching toward socialism, the road chosen by Europe. We continue to consume, our debt continues to expand, and eventually our birthrates will plummet to below replacement, since the raising of children seriously cramps one’s lifestyle of consumption.

When my MBA students ask for advice (always given for free and worth just what’s paid), one of the recommendations I give is that they keep their lifestyle well below their means. There is huge optionality in living below one’s income; it means you can be secure enough to take risks. And risk-taking is a prerequisite of true progress.

In short, the future still looks bright, but only if we live more modestly and don’t lose our nerve. And, I gotta say, both of these are a whole heck of a lot easier if you believe in God and worship Him with others…

L3

Sep 28, 2008 - 12:18 pm 29. Darren:

There is a large move among the politically liberal I commnicate with to make this out to be the fault of people with financial knowledge taking advantage of people without financial knowledge.

The only knowledge required to prevent this problem is the old and more-true-now-than-ever adage: There Ain’t No Such Thing As A Free Lunch, also known as its acronym, TANSTAFFL.

The fact that people with financial knowledge contrived a complicated system wherein the sandwiches, apples, cookies and milk of the expected free lunches were first bundled, then separately packaged and commoditized, purchased on leverage and multiply resold does not affect the fact that there is not, in fact, a free lunch to be had.

When tells me they have a perpetual motion machine, I don’t have to listen anymore. It’s not going to work, period. When someone tells me a system will produce money at no risk and with low cost, I don’t have to listen to them anymore, either.

I agree with Wretchard that this is the end of the public-private partnership model, or it should be. When someone tells me that, as a member of the public I put my hand immediately over my wallet. When these things go Tango Uniform it’s always the public, the guarantor of last resort, that is on the hook for the bill. The private people are usually nowhere to be found at that point.

Sep 28, 2008 - 1:01 pm 30. Leo Linbeck III:

Darren,

Well said. You and W are right, methinks. Public-private is finished. The only remaining question is what comes next: public or private.

It looks like public is leading at the turn. But don’t count out private just yet…

L3

Sep 28, 2008 - 3:21 pm 31. The Count:

Great comments L3!

Sep 28, 2008 - 8:42 pm 32. 3Case:

“political altruists – isn’t that some sort of oxymoron…up from the 6th or 7th circle, perhaps?

Sep 28, 2008 - 8:45 pm 33. 3Case:

sorry…8th or 9th….

Sep 28, 2008 - 8:51 pm 34. Whitehall:

As to the wickedness of the carbon cap and trade system:

At a shareholder meeting in May, FPL Group Chief Executive Lew Hay III told investors that pending carbon legislation could within a few years boost the company’s annual earnings by $690 million a year, depending on how greenhouse gases are priced. FPL is the country’s biggest supplier of wind and solar power and a favorite of analysts.”

Where is that money coming from, my fellow chumps?

Pure rent seeking. I wish to hell McCain would walk back from his supporting platform, and quickly.

Sep 28, 2008 - 9:27 pm 35. Orion:

While I agree with 90% of your post, the Y2K bug could very well HAVE been lethal. Yes, as a Consultant I made a fair bit of the folding-green off fixing it.

And because of my efforts and those of a really HUGE number of other keyboard-jockeys there were VERY few problems and those that DID occur were easily dealt with. But they Y2K was NOT a joke (like Global Warming) – We squeaked a lot of those fixes in just under the wire. I know because I had to document the likely consequence of failing to put each patch in place.

Orion

Sep 29, 2008 - 12:19 am 36. Bud:

90% of the “problem” Y2K issues were identified (and plans to fix them initiated) by ‘96. The next 4 years were consumed by hype. Lord knows how many times I had to “certify” that We had a “Y2K” free system. It was an embedded processor comm system, the RTC in it could be reset as needed, and was only used for logging timestamps for assistance in troubleshooting. We probably wasted $20K a year from ‘95 on doing this “certification”.

Sep 30, 2008 - 12:11 pm

Sorry, comments for this entry are closed at this time.