Bizarro World!

This is one of those through the looking glass moments where it seems that what politicians are saying publicly can't be what they really think, but what they are saying publicly is the kind of stuff they should keep quiet about. I speak, of course, about the "torture" debate (when will the newsies stop putting quotes around torture?). The bizarro effect stems from the Republican stance that no wrong doing occurred and that "You can't criminalize policy disagreements". Imagine stealing your neighbors belongings and claiming when the police show up that you merely have a different opinion about personal property rights than your neighbor so it wasn't really stealing. Now imagine the look on your neighbor's face when the police shrug and walk away.

I can't help but sit a little slack jawed while elected members of the senate and house advocate torturing people. What truly boggles the mind are the ham handed attempts to retroactively justify it. The so called "ticking time bomb" scenario is one example. At first pass this seems like a reasonable point of debate, is the morality of an inherently immoral act outweighed by the potential for even greater harm? The problem is that this situation never occurred. The response most often given by anti-torture advocates is that it almost never occurs. That is irrelevant. The debate isn't whether torture should be on the table in the future, the problem is that it did occur. We don't have to examine hypothetical situations, we can know what happened, why it happened and whether anything worthwhile at all was gained.

The next most dubious claim is that what the "high value detainees" experienced was not torture. If anyone seriously doubts that what these men endured was torture they need look no further than the report issued by noted left wing radical group The International Committee of the Red Cross. If that isn't torture I don't know what is. Even if a single instance of water boarding did not constitute torture, isn't it likely that enduring it 183 times in a month, would make it torture? I would bet that almost anything would get pretty damn old after 183 times in 30 days.

Keep in mind that these are the same Republicans who claim that they are for small government. Taxes Bad! Social Security Bad! Medicare Bad! Torture Good! Secret prisons with no judicial over sight Good! We knew all along that these folks aren't big readers, but I suggest they pick up a copy of The Gulag Archipelago and see if they can find any similarities. Then they should consider if that is the kind of small government they want to usher in.

That the President is fighting tooth and nail (in his ever so calm, nothing is wrong manner)to stop meaningful investigation into the "alleged" "torture" is more disheartening than finding out conclusively that the previous administration authorized it. As Paul Krugman pointed out in his column today there is little to be lost by the administration if prosecutions are allowed. It would be quite a feat for the President to have less Republican support in Congress. Maybe I'm a loony, but it seems to me that forcing your political opponents to openly defend torture can only help you in the polls.

The claim that only banana republics prosecute officials for breaking the law is ludicrous. Only banana republics allow government officials to torture or at least order torture without fear of consequence. If the notion of high ranking administration officials standing trial seems hard to come to terms with, that is only because the notion of the same officials committing these crimes is equally hard to comprehend. Thankfully the U.S. Constitution is strong enough to force the peaceful transfer of power even when the individuals holding the power have no respect for it, let alone human life and dignity. I think the Constitution is also strong enough to see to it that the law applies to all citizens equally.


Further thoughts: Upon further reflection what troubles me most is that these officials claim to be deeply religious, that they were speaking for a voters concerned with morality. Where in the Bible, after instructing us to turn the other cheek, did Jesus say that torturing your fellow man is ok?

Trying out iPhone blogging app

There are so many cool free apps for the iPhone that it's easy to get carried away downloading them. This is essentially a test of the app. If it works as advertised will allow me to post as I think of things rather than trying to remember the good topic later. We'll see how it goes.

Rush is Right

Well... not about much
Rush Limbaugh got plenty of attention in the last few weeks for criticizing President Obama as well as more moderate members of the Republican Party. While I agree with the general reaction that he is ultimately a drain on the Party (and I hope the moderates he finds so traitorous are able to reshape the Republican Party so that we can have serious debate about policy in Washington)I do agree with one message that Limbaugh has been spouting, that of the “drive by media”. Limbaugh uses this term to dismiss critics of his political views as well as his tactics, but that doesn’t mean he is wrong in affixing the label to the talking heads. The current dustup between Jon Stewart and CNBC illustrates the need we have for more serious journalism on TV.

Jon Stewart appears to have ignited some soul searching among journalistic circles, while many refuse to accept that there is a problem outside of business news. On Huffington Post the idea of Stewart interviewing Cheney on a Sunday news show is examined (I like the idea). Why does it take a comedian to ask tough questions? Jon Stewart has credibility with in certain demographics (including my house), but surely there is someone outside of late night comedy that is willing to be hold politicians accountable. That would bring ratings, wouldn't it?

Why is cable news coverage so superficial? Upon first glance the format would seem to lend itself to in depth coverage (it can’t be easy to fill a whole day of coverage after all). After a Presidential speech or candidate debate one of the first aspects discussed by the panel of “experts” is “How will the American People respond?” Hello, we ARE the American people! Why are you spending time discussing how we are feeling about what we just watched? Why are you discussing whether it was a good speech? Can’t we decide whether we liked the speech and how we feel about it? After the President gives a speech on changing stem cell policy in the U.S. for example, why not have someone… I don’t know… who works in stem cell research explain what it will change and how THEY feel about it? What does reading poll numbers possibly add to the debate? Not a thing. It seems highly unlikely that someone is going to change their mind about the ethical quandaries raised because some chunk of the population thinks its ok.

Another bugaboo in the media is this insistence on keeping coverage “fair”. Global warming is an issue that is complex and has multiple facets that need to be addressed. When convening a panel to discuss the issues it seems logical to have multiple points of view so as to cover say the technology that might be used to slow or even reverse warming trends as well as the likely impacts to be seen in parts of the world. Why is there a need to always bring in some blowhard whose sole contribution seems to be standing with his eyes closed, fingers in ear shouting “la la la la, I’m not listening. I don’t see or hear anything about global warming there for it can’t be real. It just snowed in Mexico problem solved”? Much to my chagrin they are usually economists.

Recently former officials from the previous administration are popping up to give us their opinion on what's going on (and why it isn't their fault). I know I am dying to hear Karl Rove's view on President Obama running a budget deficit and why they are worse than the deficits that existed under former President Bush. "After all we were fighting two wars." I guess I missed the memo that one of them has ended. Apparently Karl missed the memo about one of the wars being a war of choice and a boondoggle to to end all boondoggles. Again I am waiting for someone to have the fore sight to be ready to ask Rove and his ilk about that as Jon Stewart, no doubt, would. News anchors can continue to put down the work of late night comics but I think its high time they took a cue or two from them.

Rant Over.

The Housing Mess

That the real estate market played a key role in bringing about the current economic mess is accepted as fact now. What remains to be decided is what should be done about it. The Obama administration recently proposed a program that would help home owners bring their payments into the range of what is considered a sustainable level, that is 30% of household income spent on either rent or PITI (principal, interest, taxes and insurance). The Republican “plan” so far is to stop the fall in home prices with incentives, such as the $8,000 tax credit for first time homebuyers in the stimulus bill. There seems to be little debate though that the housing market is not working and needs to be kick started. Perhaps there should be.

It should not be a surprise that housing prices rose rapidly in the last decade. What I find so discouraging is that policy discussions appear to focus on keeping housing prices at the bubble levels. Is that a bit nuts? It can’t just be me. The problem with trying to fix the economy by “stabilizing” housing prices is that the approach cannot address the fundamental problems that exist in the economy. If falling housing prices is a symptom of the economic turmoil then stopping that slide is not going to “fix” the economy. If the fall in housing prices is indeed a cause of the wider problem then they are falling because of natural economic forces and attempts to stop the slide will merely be delaying actions.

I would argue that it’s a mix. The rise in housing prices should be viewed as a consequence of the cheap credit and ensuing loose lending policies that affected other markets as well, such as hedge fund acquisitions. The fall in housing prices that we are seeing now is likely a return to what would have been market prices had the bubble not occurred. The real hitch is that credit markets seem to have over shot in their effort to move to safer practices. It seems clear to me that the real problems are in the credit market and they always were. The best policy should be targeted at the banks that are in real trouble.

Examining U.S. median home price data as well as median income data from over the last 30 or so years reveals a troubling trend. From the first quarter of 1985 through the first quarter of 2006 (the peak of the bubble) the real (adjusted for inflation) median home price in the U.S. rose 95.82%. That is the median house price nearly doubled in that 31 year stretch from $134,213 to $262,816. That is not so troubling if incomes are rising at a similar pace, but over roughly the same span (1984-2006) real median income rose a grand total of $6,206. Household income, after adjusting for inflation, grew 14.8% over 32 years from $41,817 to $48,023, actually peaking in 1999. It doesn’t take an advanced degree in… well… anything to realize that that trend is not sustainable. It’s clear that housing prices needed to fall, why didn’t any of the traders in mortgage backed securities figure that out sooner? More importantly, why are the President, Congress and the media ignoring it now? It’s happening and it’s going to continue happening.

Just in case you thought I don't have fun...

Here are a couple of videos that I that really capture the spirit of the crisis. The SNL clip is makes me laugh hard everytime. The Daily Show clip is intended to make you feel better about not understanding all the aspects of the financial crisis.

The Daily Show With Jon StewartM - Th 11p / 10c

CNBC Gives Financial Advice

Daily Show Full Episodes
Important Things With Demetri Martin

Political Humor
Joke of the Day

Playing with the Numbers

Those of us not living in caves (a housing situation that will no doubt become more popular in the coming months) may have been shocked at the vast sums of money that are being discussed in the news recently.  The total amount of money that AIG has received so far is estimated (estimated? Doesn’t anyone know how much money we’re giving away?) to be 170 billion dollars.  So far G.M. has asked for about $30 billion while Chrysler has asked for $9 billion (aren’t they ever so frugal). Of course the dreaded stimulus bill will cost about $787 billion. The homeowner bailout will cost about $75 billion if enacted as proposed. These numbers can be intimidating.

The thing with numbers is that they never hide the truth in skillfully manipulated phrasing. If you have the right numbers you have everything you need to understand what you are examining. That said when dealing with economics on a national scale the numbers can be misleading; or rather how we conceptualize the numbers can be misleading.  A million dollars is a lot of money. A billion dollars is one thousand times more money. A trillion dollars is one thousand times more still. If you had pile of one million dollars you would need 170,000 piles to get what AIG has been “loaned” so far.  It gets a little scary.

To bring a little calm to the situation I think it’s important to remember these numbers don’t exist in a vacuum. In 2008 the U.S. economy was estimated to be $14 trillion, which would be 14 million piles of one million dollars. The U.S. Government had a budget of $2.9 trillion dollars in 2008. Now that’s a lot of money.  What I mean to say is that even though we are spending huge sums of money right now in attempt to stop the bleeding, the U.S. economy has the capacity to absorb it, even now.  In fact the dollar has been gaining in value since about the middle of January (I wonder what significant event occurred then).  What we are seeing is what is known as a “flight to quality.” This is the idea that during uncertain financial times investors are willing to sacrifice profit for security. U.S. treasury bonds are seen as the safest investment in the world and the rise in the value of the dollar indicates that people are trading foreign currencies for dollars so that they can buy U.S. bonds.  This is a good thing because there is surely going to be a healthy supply of government debt issued in the next few years.

One has to wonder can the U.S. continue to fund endeavors that may not be essential to its citizens. Foreign aid is a good example. We would really like help people in Africa for instance, but given the crisis we face here is it feasible? In short, yes. In the grand scheme of things the U.S. contribution to foreign aid is a relatively insignificant amount of money when compared to the numbers above. The U.S. government budgeted 20.27 billion dollars for foreign aid in 2008, which is 0.6989% of the federal budget or 0.1448% of the U.S. economy.  Another important thing to note is the composition of the aid. Some of this money is spent abroad in the “War on Drugs”.  Some of this aid is in food, which is quite a boon to U.S. agriculture. A large portion of the money is never actually spent over seas (agriculture programs that buy domestic food and dump it abroad and administrative costs take quite a chunk) and it could be argued that some of the money spent stopping drugs from South America saves money in for the U.S. judicial system.

It is also important to note that the U.S. has much, much higher standards of living than most of the rest of the world, even during economic crises. An unemployed person in the U.S. is inconceivable better off than the bulk of the world’s poor that exist on less than $1 a day. In these uncertain economic times it will likely be harder for poorer nations to attract foreign capital so that they can invest in themselves, making it that much more important for the U.S. to do it. 

Obama's Recession

Like me you were probably surprised to learn that the current recession was started by Barack Obama. The learned commentators on the right have seen through the smoke and mirrors to the real cause of this economic mess: The election of Barack Hussein Obama.  That’s good to know because you can’t fix a problem until you know what the source is. All we need now is a time machine to go back and not elect him.

The irrefutable logic rests solely on the movements of the stock market, yes that stock market.  According to Rush Limbaugh, Sean Hannity  and friends the stock market was cruising along fine and with it the economy until word got out that Barack Obama might actually win.  After that all hell broke loose. 

Setting aside the validity of the argument for a moment, the right must think Obama has some pretty powerful mojo working. He was able to send our economy into a tailspin before he enacted a single policy, before a single cabinet pick was announced.  I’m all for giving credit where credit is due, but this seems extreme.

The first and most obvious critique to this line of reasoning is that the stock market was on a pretty significant downward trajectory well before the election.  As the chart shows the Dow peaked at about 14,000 in September of 2007. From that point onward a clear trend develops that spells doom for 401ks everywhere. Things really take a turn for the worse right about the time that John McCain issued his now famous “the fundamentals of the economy are strong” thus ending any serious chance of his winning the election. 

One thing that needs to be pointed out again, and again and again, is that the stock market is not the same as the economy. The stock market is, well, a market place. The economy is all the goods and services that get produced. The GDP is a measure of the official human activity in the country over a given time.  If we have that clear we can address the claim that Obama caused the recession. 

It is now known that the recession started in December 2007. What is inconvenient to those trying to pin this on Obama is that he didn’t win the caucus in Iowa until January 3^rd, 2008. So it seems that Obama already has that time machine.  The reality is that the economy was never gangbusters during the Bush years. Aside from 2000 (we all know how that ended) and 2004 economic growth was pretty tame, certainly not something to brag about, but hey growth is better than contraction right.

The real reason that recession is not Obama’s fault (besides the fact that it started well before he was elected) is the credit bubble. People’s homes are not in foreclosure because the Dow is tanking. Heck, it might even be the other way around. There’s a thought, the stock market is diving off a cliff because of the economic troubles. Maybe the right wing blabber mouths (or “News Actors “as Keith Olbermann refers to them) didn’t notice the over the top rise in home values over the last few years. Maybe they didn’t notice that banks were taking these mortgages, bundling them together and selling them left and right. It would seem that they haven’t noticed that at some point in the last year these traders figured out that they didn’t really understand what they were trading. The fortunes of our economy hinged on huge financial institutions not realizing they were playing a financial risk version of Where’s Waldo with trillions of dollars on the line. The problem is they figured it out eventually, and they had no idea where Waldo was.  

So here we are with millions of people in houses they can’t afford that they were able to buy because lenders weren’t hanging on to the mortgages and therefore didn’t retain the risk should default occur. Prestigious trading houses were hoovering up (sorry couldn’t resist) these toxic assets because “Hey, real estate never loses value” and “It’s the only thing they can’t make more of.”

Clearly Obama needs to use his time machine to go back and withdraw his name from consideration. It’s his patriotic duty as President.