Maggie's Farm

"Viva McCain," says Bill Kristol. He begins:

It's been a dopey campaign. But they usually are. In 1932, Franklin Roosevelt ran on balancing the budget and cutting government spending. In 1940, it was preserving U.S. neutrality in the European war. In 1960, on the cusp of a decade of fundamental change in race relations and the size and scope of the government, John F. Kennedy and Richard Nixon spent a lot of time debating a nonexistent missile gap and Quemoy and Matsu. In 2000, the issue of Islamic terrorism was barely mentioned by George W. Bush or Al Gore.

This isn't a criticism of America or of its democracy. Other countries are no better. And it's not as if our elites are any more far-seeing than our politicians. Election campaigns--like intellectual debates--tend to be past- and present-oriented. But sometimes the past and present are of limited use as guides to the future.

I am sure that many readers dislike Krugman for his relentless - and often deceptive and hysterical -political partisanship in the NYT. However, he has apparently made some genuine contributions to economics.

The NJ's link to Marginal Revolution on Krugman's Nobel led me to this somewhat technical essay by Krugman on The Role of Geography in Development. Quite fascinating, whether you agree with his assumptions or not.

They said that Louis XlV had two baths in his life: one when he was born, and the second one killed him.

Interesting review of two books on the history of cleanliness at Wilson Quarterly, but it does not explain why gals like baths and guys like showers.

Our ancestors must have smelled ripe.

In Switzerland, it's about Plant Dignity. But I think psychosis has been going mainstream for quite a while, mainly because psychotics are noisier than the rest of us.

Fortunately, I use a compassionate and humane chainsaw when I murder and dismember innocent trees. 

The Stihl Farm Boss is the Official Maggie's Farm Humane Chainsaw. It is so good that the plants don't feel anything.

Norm begs to differ, says that social collectivities themselves have moral responsibilities.

Is an apology a request for forgiveness? Or is it just good manners? SC&A wonders whether the world needs more hate and less forgiveness and "tolerance."

The above are all reactions to essays in the periodical In Character, in their Forgiveness issue.

Are we seeing one?

I hope not, but it's always possible.

"When I look at the wealth I have lost over the past two months, what I think about is the hours of work I put in to build it. That money, to me, is now lost time that, in retrospect, I could have spent better with my wife, family, and friends because my work is just a good job to pay the bills, and not a mission. My family is my mission."

A friend

Who will be the buyers?

It's easy to forget that American financial markets are dominated by institutional investors, not by individuals. Institutional investors do not "panic" but, these days, institutional investors are puking assets for a variety of reasons: hedge funds to cover redemptions and to reduce their leverage, banks to reduce their leverage (what fraction of a trillion $ of assets, for example, does just Goldman alone need to dump to reduce their leverage?), and so forth. Sovereign wealth funds are, I am told, concerned about an Obama impact on American business growth and profits.

Of course, retail investors like me do get scared and begin puking our equities, for example, but this doesn't drive American markets. (Asian markets consist of a higher % of retail investors than do Western markets.)

So my question is this: Who will be the buyers of all these assets? What institutions are flush with the cash to run around buying up all of these presumably well-priced or bargain-priced assets? At some point, I suppose pension funds and insurance companies will do so, but do they have the loose cash to support the markets?

Well, I am assured that there is tons of cash out there, waiting for the right moment to commit. Nobody wants to jump in early, and few want to be the first to do it. Keeping their powder dry.

Additionally, a friend of mine in the financial business told me that the markets are the least of the problem. "Markets go up and they go down - that's normal and that's the deal," he said. "The real problem is the potential depth and duration of the global recession we are looking at, and the markets only reflect that. This will not be a normal, ordinary recession, and the politics could worsen it just as they did in the Depression. The markets are telling us that we have been spoiled, and that the candy is going away for a while. Six months or 5 years? I don't have a clue anymore."

"All I know for sure is that people in distressed assets will make money over the long haul - if they can last long enough."

He concluded "One of my friends is so worried that he is seriously considering selling his Citation and switching over to NetJets." Here's a nice Citation X - the best way to travel. Doesn't the Constitution give me the right to have one of these?

From Bill Whittle at NRO, who begins:

During the presidential debate Tuesday night, Barack Obama was asked if he thought health care was a “right.”He said he thought it was a right. Well, if you accept that premise, I think you can ask some logical follow-up questions: Food is more important than health care. You die pretty quickly without food. Do we have a “right” to food in America? What about shelter? Do we have a “right” to housing? And if we do have a right to housing, what standard of housing do we have a right to? And if it is a right, due to all Americans, wouldn’t that mean that no one should have to accept any housing, or health care, which is inferior to anyone else’s… since it’s a right? Do we have a right to be safe? Do we have a right to be comfortable? Do we have a right to wide-screen televisions? Where does this end?

Read the whole thing. This is a point we have all made many times on Maggie's Farm. American rights are the rights of freedom from the government. There are no rights "for" anything. Whenever the government provides something, it diminishes the rights and autonomy of somebody else because government produces nothing - no products and no wealth and no money and no capital. Only citizens do that. That's the problem: rights without responsibilities are are snare and a delusion.

Related to the above, it's time to repeat our earlier notion that the markets are anticipating an Obama victory, thus driving more money - and especially foreign money - from our markets. In support of that idea, Insty found this graph:

Steyn has it exactly right.

Real Yankees don't do "nice." Indeed, we tend to be suspicious of it. We like to be cranky and difficult, too, along with zenophobic and intolerant - whenever possible. And when we're told what to do, we tend to rebel.

I don't care about the value of my house, because I am not going anywhere. I love where I am, especially as the air grows crisper, the leaves change, and hunting season begins.

My pension though, of which 75% in the various stock markets of the world (but mostly US), has taken a bad hit, which is discouraging to say the least. This is ouch.

And outside my pension - I could have had much more fun spending that money on toys and trips than watching it evaporate.

I asked my money manager pal what he's doing. He said that, for taxable, he is buying medium-term high grade corporates and GNMA pass-throughs. Otherwise, he likes munis at this point.

He (wisely) would not advise about holding or selling my stocks and equity mutual funds. Or buying now for the long haul, as Warren Buffet is doing. Thinking GE and American Express. Who knows? We're going into a global recession, so there will be time to think. But not to worry - America is strong and we barristers are always in demand. And, at Maggie's, we do not believe in retirement anyway. Who wants to be useless?

Washington should make laws that investments can only go up, and that prices for other things we buy only go down, don'tcha think?

Now you can't say "wetbacks," or you will be in deep trouble. Then what should we call people who swim across the Rio Grande illegally? How about "swimmers"?

And can I still say "terrorist"? Or should I say "ununiformed murderer"? I refuse to give in to the Speech Nazis. In fact, I resist them, even at the risk of being impolitic or unmannerly at times.

Photo: A nice wetback.

Having fun with these markets yet? Too bad there isn't much left that you can short. It's goofy.

Soros and the missing SNL skit. Michelle

McCain's health care ideas

The People's Hedge Fund

Insty:

JENNIFER RUBIN: Since Palin was asked about creationism, Obama should be asked about Marxism.

I was 9 years old when my friend tried to kill you.

Quoted from Steyn:

The current characterizations of Professor Ayers—-“unrepentant terrorist,” “lunatic leftist”—-are unrecognizable to those who know or work with him. It’s true that Professor Ayers participated passionately in the civil rights and antiwar movements of the 1960s, as did hundreds of thousands of Americans.

Really? Hundreds of thousands of Americans plotted to kill soldiers and their dates by blowing them up at a dance? No wonder Barack's ahead in the polls.

From Willisms:

 

When a truck is parked next to my study, it interferes with the wireless to my machine. Honest.

Do I need a tin-foil hat, or does the truck, or does my machine?

When Jim Cramer says PANIC! SELL EVERYTHING! it sounds like true capitulation to me.

He predicts a 20% stock market drop soon or over the next quarter. If you sell now, that's a 15% tax hit, so, effectively, that 20% drop is only a 5% drop. Of course, Obama promises us higher cap gains taxes, which is another subject. As is pension money.

Whenever there are crises in markets, socialists are quick to label them as failures of capitalism and free markets.  While markets surely do, on occasion, fail, freeze-up, or get clogged (although they are far more effective than planned economies), in this case you need look no further than the role of government regulation and control to see the seeds of the problem:

Rep. Barney Frank: I do think I do not want the same kind of focus on safety and soundness that we have in OCC [Office of the Comptroller of the Currency] and OTS [Office of Thrift Supervision]. I want to roll the dice a little bit more in this situation towards subsidized housing. . . .

Yes, Congress asked Fannie and Freddie to roll the dice, and they did so while making a pretty penny for themselves. As Kimball put it today:

... in recent years the “invisible hand” that adjudicates among competing interests to produce the most efficient channels of economic growth has increasingly been replaced by the heavy hand of government-sponsored social engineering. One especially onerous one is in the form of the Community Reinvestment Act, which, in its fully-developed, post-1995 form, was a gigantic wrench tossed into the engine of capitalism that stymied the orderly evaluation and pricing of risk. It’s one thing to give Chris Dodd or Barack Obama a sweetheart mortgage for favors rendered. It’s quite another to force banks to issue more than $1 trillion of risky mortgages to people with bad, or no, credit history and then prop them up with taxpayer guarantees through the agency of entities like Fannie Mae and Freddy Mac.

Banks didn't want to own all these loans so they packaged them in creative ways and sold them like bonds to willing buyers (albeit with possibly erroneous triple-A ratings). You can call that "greed" or you can call that smart. But when the market for these packages disappeared because the housing bubble burst, the owners of the packages were forced under the new laws to mark to market - and there was no market. It's as if you tried to sell your house today for $500,000., but nobody gave you an offer today, so overnight your net worth (and your ability to get credit) dropped by $500,000.

Anyway, now banks are hoarding cash to meet their capital needs and to avoid further risk. That is why we will begin to see funds fail, and maybe more institutions fail, unless the Feds do more than their rescue bill to loosen up credit.

Malone put it this way:

Marxists and statists of all stripes are, as one might expect, rubbing their hands in glee and declaring this the final death crisis of Capitalism. But I think just the opposite is occurring. What we are in fact seeing are the final death throes of governmental social engineering. As I noted two weeks ago, we are in a kind of Mentos-in-coke world right now - where, thanks to tech, the sheer speed of transactions and the enormous breadth of response, almost any outside influence can quickly turn the whole economy (or culture) into an explosive brew.

Will Wilkinson takes on Thaler and Sunstein's "libertarian paternalism." One quote:

Despite the welcome weight Thaler and Sunstein throw behind a few genuinely liberty-enhancing policies, the thrust of the conceptual renovation behind the term libertarian paternalism is to empower, not limit, political elites. In the libertarian paternalist scheme, the rules will allow for an easy opt-out only so long as those writing the rules happen to care about preserving choice. The "libertarian" part of the equation is secured by good will alone. If that falters, we are left with paternalism, plain and simple. Old-fashioned libertarianism, it turns out, had a great deal to say about the choice architecture of politics. Given the intense attractions of power and the limits of benevolence, liberty (and therefore the commonweal) is best secured by setting in place a structure of rules that strictly limits the discretion of the powerful. That includes the discretion even of choice-loving technocrats.

All Nudge really offers is the idea that we should use what we know about how people act in order to design policy that will help them. And we shouldn't take away their choices. Well, I'm for all of it. If some policy makers really are misled by unrealistic economic models of rationality, then they should cut it out and bone up on psychology. Behavioral economics provides valuable new information about what will and won't work, and why. Thaler's work on savings plans is a great example of what can be done by taking into account new findings in psychology.

But it's no source of ideological realignment, no basis for what Thaler and Sunstein call a "Real Third Way."

You can read his whole piece on Nudge at the Cato Institute. Our readers already know my problems with their line of thinking: "Libertarian paternalism" is an oxymoron, and the academics and political elites, who claim they want to "help" us by guiding our lives, have never impressed me as possessed of any particular wisdom in that regard - or even of any ability to manage their own lives any better than anybody else.

Despite the hysterical fear-mongering, the US economy is just fine, outside of Wall Street - and outside the print MSM, which is in a chronic economic and emotional depression.

This is what seems truly depressing to me, and I think there is some truth to it despite being from Time:

The deeper problem, say growing numbers of worried GOP establishment types, is that while lurching around to win the daily and weekly news cycles, McCain has failed to give voters a broad, forward-looking explanation for why they should support him. McCain's national security experience and reputation as a reformer add substance to his theme of "putting country first," but they don't explain what a McCain presidency would mean, or how it would differ from the past eight years. "At no point have they told the American people where John wants to lead them," says a third Republican strategist. "Had they spent more time laying the predicate, they'd have something to fall back on now."

If McCain loses, prepare the circular firing squad. How could an inexperienced, left-wing guy with sketchy pals win an election? I think the banking mess has just freaked people out and made them feel insecure. It makes "change" sound good, regardless of what it really entails.

We have to remember that most people are too sane to follow politics closely, and are wise enough to know that this, too, shall pass...

Re world food prices, quoted from Our Daily Bread in The Boston Review:

What happens to future corn and vegetable oil prices, and therefore to the entire structure of food prices, is dependent primarily on the price of oil and on whether the new biofuel mandates for ethanol in the United States and biodiesel in Europe are imposed or rescinded.

The price of oil, in particular, is a fundamental factor in the overall equation. In a world of $50-per-barrel oil, growth in biofuels would have been more limited, with a much smaller spillover onto food prices. But the links that have emerged between agricultural and energy sectors will shape future investments and the well-being of farmers and consumers worldwide.

Quoted from a piece by the Anchoress:

It’s time for the GOP and people on the right to realize that - for now - the rules have changed. There is a whole ‘nother rulebook being used, and sitting around flapping the old rule book and whining “c’mon, guys, c’mmmmmmon,” is not going to get the game back on track.

John McCain needs to realize it today. So does Palin. We need to recognise it and begin to compete under these new rules, or just concede the game. John McCain needs to stop trying to act like a referee and start acting like the quarterback.

By the way, we’re outnumbered. Team Mainstream has all the heavyweights, the guards, the tackles and the microphones, too - so they call the plays the way they see them, regardless of what is actually happening. The spectators are eating pretzels and wondering if they’ll win the office pool, but they’re busy listening to the color commentary rather than watching the game with their own eyes.

How do we win? Maybe we can’t. Maybe things are too far gone. But I’m thinking McCain needs to make a very aggressive play, here - right now - to do or die.

The steamroller media is about to sack McCain - to flatten him before he ever gets the ball out of his hand - and Palin, the wide receiver, has a whole pack running right along side of her; they’re effectively blocking her from all sides.

McCain needs to make a Hail Mary pass, if he can, if he has one up his sleeve.

He has already tried a few of them. It's difficult to get a fair hearing these days from the MSM. But what else is new? This election feels like American Idol (which I have heard about, but never seen).

The moderator of the VP debate is the author of a pro-Obama book.

It's frustrating to play against a stacked deck, but that's what this election seems to be. The old saying is "Never get in an argument with people who buy ink by the barrel."

...then why not ruin your day and creep yourself out by watching this political horror video (which feels like something from North Korea). I have no reason to believe that this was intended as satire:

Yes, they joked and giggled. 

The "bailout plan" was, for them, all about politics and nothing about the country - and only an illusion of bipartisan concern to fool us. These people are not leaders - they are calculating connivers and manipulators of their lap-dog press.

It isn't funny. This quote from Sowell today:

The roots of this problem go back many years, but since the crisis to which all this led happened on George W. Bush's watch, that is enough for those who think in terms of talking points, without wanting to be confused by the facts.

In reality, President Bush tried unsuccessfully, years ago, to get Congress to create some regulatory agency to oversee Fannie Mae and Freddie Mac.

N. Gregory Mankiw, his Chairman of the Council of Economic Advisers, warned in February 2004 that expecting a government bailout if things go wrong "creates an incentive for a company to take on risk and enjoy the associated increase in return."

The Dems, with ACORN, adamantly opposed those efforts.

Mulligan at Supply and Demand makes the case for the delinkage of Main Street and Wall Street economies (h/t, Marginal Rev). One quote:

...history has shown that the non-financial sector can do well when the financial sector does poorly, and vice versa.