New Kid on the Blog

And everyone wants to play with him--but does he really teach in an English luxury car?:

Yesterday the Boston Herald interviewed Brad Delong. Brad said he thought I was a right winger, and that he didn’t agree with many of my views. Nonetheless I appreciate that despite ideological differences Brad called me “thoughtful.” I thought his paper on monetarism was very good, and cite it frequently. I am not a big fan of FDR, but given Brad’s remarks about me being right wing it is fun to be able to get to the left of many of his admirers in this particular post. (Now if only Paul Krugman would use the phrase ‘thoughtful right winger’ more often.)

Of course, he won't really have arrived until his comments are deleted by the host at Semi-Daily Journal.

As Seen on TV

What the Boston Fed hath wrought:

Christopher Brooks, 39, pleaded guilty last fall to conspiring to commit wire fraud in connection with fraudulent loan applications on 18 Puget Sound-area homes that went into foreclosure and were sold by banks at a loss of more than $2 million.

....Brooks' mortgage-fraud scheme and the fallout spotlight an intensifying debate over how to deal with millions of loan defaults and foreclosures that are crippling the nation's housing and credit markets. ....

The FBI received more than 66,000 reports from banks last year, compared with fewer than 7,000 in 2003. Those suspected-fraud reports capture a fraction of the problem. Only banks — not other types of lenders or real-estate professionals — are required to report suspicious activity.

....The deluge of mortgage-fraud cases that is straining law-enforcement agencies now, experts say, could have been prevented if all lenders had followed traditional underwriting standards and been required to report fraudulent activity.

....At his sentencing today, Brooks was apologetic. "My intent going into this was not to take money from people, just flip houses, like they show in infomercials," he said.

Other People's Money

The city of Seattle taxpayers are paying the price for their politicians' green delusions:

You may have seen the city's cars around town, painted with an eye-catching claim on the rear bumper: "This plug-in hybrid gets 100+mpg."

Also, a greener boast: "150+City MPG!"

Not exactly, it turns out. Not even close.

Try 51 miles per gallon, city and highway combined. Not counting the cost of the electricity.
It's what 14 plug-in Priuses averaged after driving a total of 17,636 miles. The pilot project is one of the few in the nation to subject plug-in hybrid cars to regular motor-pool duty, as opposed to being driven by hypermilers or alt-energy enthusiasts.

"We're not putting these cars on a test track," said Scott Thomsen, a spokesman for Seattle City Light, which has three of the plug-ins. "We've got them on hills and wet streets, in the cold and the hot, on short trips and long — all the conditions that real people deal with every day."

Getting 51 miles per gallon sounds fine compared to most gas cars. But it's a black eye for a technology that trumpets it will get twice that. And which doesn't pencil financially unless it hits at least 80 miles per gallon.

....The problem is the extra battery costs $10,000. At 51 mpg, the plug-in saves only about $200 in gas costs annually compared to a regular Prius in the city's fleet (and that's at $4 a gallon.) It would take 50 years to make back the cost of the extra battery.

Arabic Numbers

They don't add up says the founder of Al Qaeda:

Sayyid Imam al-Sharif, who goes by the nom de guerre Dr Fadl, helped bin Laden create al-Qaeda and then led an Islamist insurgency in Egypt in the 1990s.

But in a book written from inside an Egyptian prison, he has launched a frontal attack on al-Qaeda's ideology and the personal failings of bin Laden and particularly his Egyptian deputy, Ayman al-Zawahiri.

....Today, however, he believes the murder of innocent people is both contrary to Islam and a strategic error. "Every drop of blood that was shed or is being shed in Afghanistan and Iraq is the responsibility of bin Laden and Zawahiri and their followers," writes Dr Fadl.

The terrorist attacks on September 11 were both immoral and counterproductive, he writes. "Ramming America has become the shortest road to fame and leadership among the Arabs and Muslims. But what good is it if you destroy one of your enemy's buildings, and he destroys one of your countries? What good is it if you kill one of his people, and he kills a thousand of yours?" asks Dr Fadl. "That, in short, is my evaluation of 9/11."

He is equally unsparing about Muslims who move to the West and then take up terrorism. "If they gave you permission to enter their homes and live with them, and if they gave you security for yourself and your money, and if they gave you the opportunity to work or study, or they granted you political asylum," writes Dr Fadl, then it is "not honourable" to "betray them, through killing and destruction".

Bring it on

Heather MacDonald--no coward she--responds to Eric Holder:

...if Attorney General Holder is really sincere about wanting a “frank” conversation about race, he should put the following items on the agenda:

The American electorate. The country just elected its first black president. ....

Crime. .... the homicide rate for black men between the ages of 18 and 24 is well over ten times that of whites. And disparities in other violent-crime rates are just as startling. In New York City, one of the nation’s safest large cities, 83 percent of all gun assailants were black during the first six months of 2008, according to victims and witnesses, though blacks make up only 24 percent of the city’s population. Add Hispanic perps, and you account for 98 percent of all shootings in New York City. ....

Education. .... The black high school drop-out rate approaches 50 percent. On the 2006 SAT, the average score in the critical-reading section was 434 for blacks, 527 for whites, and 510 for Asians; in the math section, 429 for blacks, 536 for whites, and 587 for Asians; and in the writing section, 428 for blacks, 519 for whites, and 512 for Asians. America’s lousy showing in international math, science, and reading tests compared with Japan and Western Europe is influenced in large part by the low scores of blacks and Hispanics. If blacks and Hispanics performed at the level that whites do, the U.S. would lead all industrialized nations in reading and would lead Europe in math and science, according to a study published in the Phi Delta Kappan in 2005.

.... Perhaps Holder could confront the stigma against academic achievement among many black youth, who deride studying and staying out of trouble as “acting white.”

The family. Closing the educational achievement gap will be difficult as long as the black illegitimacy rate is nearly 71 percent, compared with a white rate of 26 percent. Taxpayers foot the bill for this family breakdown—when fatherless children who never learned self-control and self-discipline disrupt classrooms and prevent other children from learning, and when the same fatherless children get sucked up into gang life and fail to connect with the world of work and responsibility. Many poor single mothers work heroically to raise law-abiding sons, but the odds are against them.

....If inner-city blacks behaved like Asians—cramming as much knowledge into their kids as they can possibly fit into their skulls—the lingering wariness towards lower-income blacks that many Americans unquestionably harbor would disappear. ....If Eric Holder wants to crank up our racial preoccupations even further, let him at least do so with a full airing of the facts.

It All Worked Out in the End

The global financial crisis has no fury like a Chinese woman scorned:

The businessman, named as Mr Fan and said to be from the city of Qingdao on the east coast, invited the five mistresses, who had all previously learned of each others' existence, to dinner, according to a local newspaper, the Peninsula Metropolitan News.

Along with a friend, who worked for a model agency, and inspired by reality television shows, he then laid on a competition for them, according to the report.

One woman was eliminated during a "looks round" and two more, who worked as clerical officers in his company, during a speech round. The final round was a drinking competition.

The story came to light after the first loser, to show no hard feelings, took all four other women and the businessman out for a drive – upon which she drove over a cliff in the hope of taking revenge on all of them. As it turned out, she was the only one who died.

They've Gotta Beef With You

Eat your vegetables, and save the planet, say some scientists:

[Nathan] Pelletier is one of a growing number of scientists studying the environmental costs of food from field to plate.

By looking at everything from how much grain a cow eats before it is ready for slaughter to the emissions released by manure, they are getting a clearer idea of the true costs of food.

The livestock sector is estimated to account for 18 percent of global greenhouse gas emissions and beef is the biggest culprit.

Even though beef only accounts for 30 percent of meat consumption in the developed world it's responsible for 78 percent of the emissions, Pelletier said Sunday at a meeting of the American Association for the Advancement of Science.

That's because a single kilogram of beef produces 16 kilograms carbon dioxide equivalent emissions: four times higher than pork and more than ten times as much as a kilogram of poultry, Pelletier said.

If people were to simply switch from beef to chicken, emissions would be cut by 70 percent, Pelletier said.

Happy Valentine's Day

Don't lose your head over it:

Orchard Park [NY] police are investigating a particularly gruesome killing, the beheading of a woman, after her husband — an influential member of the local Muslim community — reported her death to police Thursday.

Police identified the victim as Aasiya Z. Hassan, 37. Detectives have charged her husband, Muzzammil Hassan, 44, with second-degree murder.

....Muzzammil Hassan is the founder and chief executive officer of Bridges TV, which he launched in 2004, amid hopes that it would help portray Muslims in a more positive light.

Ain't Got No Home (Equity)

And therein largely lies the unique character of this recession, says Bruce Bartlett:

Economists have long known that there is a relationship between wealth and spending in the economy. According to most studies, people will increase their spending by about $5 for each $100 increase in their net wealth. Therefore, they will reduce their spending by $5 for each $100 reduction in their wealth as well.

....Just looking at the data we already have, we would expect that consumer spending would fall by $355 billion annually. If the total loss in wealth is closer to $10 trillion, as it probably is at this point, the reduction in spending rises to $500 billion per year. That adds up to a decline in the gross domestic product of 3.5% from what would otherwise have been the case, more than enough to bring on a recession all by itself.

Emerging research, however, suggests that the problem may even be worse in this recession because so much of the decline in wealth is concentrated in housing. Most research on the wealth effect is based on changes in stock prices. But people don't view changes in financial wealth and housing wealth the same way. They tend to view housing wealth as more stable and permanent, stock market wealth as less stable and more transitory. Consequently, economists now believe that the marginal propensity to consume out of increased housing wealth is higher than that for stocks--and hence the decline in consumption from lower housing wealth will be greater than standard estimates of the wealth effect imply.

Which would seem to imply that the stimulus package now being debated in congress will not help end this recession, since it doesn't seem to make any attempt to stabilize housing and stock prices.

Take my husband...Please

Senator Debbie Stabenow pumps for the family business:

Sen. Debbie Stabenow (D-MI) told nationally syndicated talk host Bill Press this morning that the recent flips of liberal Talk stations in several markets were a "disservice to the public."

Stabenow said that, in the day of the Fairness Doctrine, "you had to have balance," and continued, "I think something that requires that in a market with owners that have multiple stations that they have got to have balance -- there has to be some community interest -- balance, you know, standard that says both sides have to be heard."

Stabenow told Press that the airwaves are "dominated by one view" that "overwhelms people's opinions -- and, unfortunately, incorrectly," and said that "right-wing conservative talk hosts" are "trying to make people angry and saying all kinds of things that aren't true and so on."

When Press asked if it is time to bring back the Fairness Doctrine, Stabenow responded, "I think it's absolutely time to pass a standard." To Press' inquiry as to whether she will push for hearings in the Seante "to bring these owners in and hold them accountable," Stabenow replied, "I have already had some discussions with colleagues, and, you know, I feel like that's going to happen. Yep."

Senator Stabenow failed to mention that her husband, Tom Athans, is an executive with liberal talk radio's Air America.

More Cooks, Better Broth

Barack Obama, fresh from announcing that unless his stimulus package is passed immediately the end of Western civilization is assured, decides to ask for more economics advice:

The Obama administration today announced a team of outside economic advisers, chaired by former Federal Reserve chairman Paul A. Volcker, to help sculpt a response to the deepening recession.

....In announcing the board this morning, Obama said he was seeking "to ensure that no stone is unturned as we work to put people back to work and to get our economy moving."

He added: "We will meet regularly so that I can hear different ideas and sharpen my own, and seek counsel that is candid and informed by the wider world."

Or, as the Red Queen put it, 'Sentence first. Verdict afterwards.'

Oh, so it isn't just us

Robert Barro interviewed by Conor Clarke:

>[Q] Do you read Paul Krugman's blog?

[A] Just when he writes nasty individual comments that people forward.

[Q] Oh, well he wrote a series of posts saying he thought the World War II spending evidence was not good, for a variety of reasons, but I guess...

[A] He said elsewhere that it was good and that it was what got us out of the depression. He just says whatever is convenient for his political argument. He doesn't behave like an economist. And the guy has never done any work in Keynesian macroeconomics, which I actually did. He has never even done any work on that. His work is in trade stuff. He did excellent work, but it has nothing to do with what he's writing about.

[Q] I'm not in a position to...

[A] No, of course not.

[Q] I'm not in a position to know things like the degree to which Paul Krugman counts as a relevant expert on new Keynesian economics.

[A] He hasn't done any work on that. Greg Mankiw has worked in that area.

Change We Can Hope On

Barack Obama launches a faith based initiative:

By now, it's clear to everyone that we have inherited an economic crisis as deep and dire as any since the days of the Great Depression.

Bad start; that is not at all clear, and certainly there is no consensus in the economics profession that this is true.

Because each day we wait to begin the work of turning our economy around, more people lose their jobs, their savings and their homes. And if nothing is done, this recession might linger for years. Our economy will lose 5 million more jobs. Unemployment will approach double digits. Our nation will sink deeper into a crisis that, at some point, we may not be able to reverse.

That's a possibility, but only one possibility. Another is that if nothing is done the normal forces of supply and demand will work, as if by an invisible hand, to stabilize the economy.

Yet another possibility is that if 'something' is done by self-interested politicians, and it is the wrong thing (and at the wrong time) that will make things worse. That is, have a depressing effect rather than a stimulating one.

In the rush to shovel money to their friends, the Nancy Pelosis and Harry Reids of the world risk misallocating hundreds of billions of dollars to less highly valued resources. Which would make it all that much harder for the American people to re-organize their lives in ways that would allow the kind of prosperity we enjoyed for a quarter century (1983 through 2007) to return.

There is nothing in history to suggest that the current legislation before congress will have the effect that Obama is promising. Even his own Chair of the Council of Economic Advisers, Christina Romer, admitted as much last month when testifying at her confirmation hearing.

What's the Matter with Frank?

The Kansan doesn't get basic economics, for one:

...state governments are in straitened circumstances these days, scarcely able to afford the upkeep on the roads and bridges they inherited from our statist ancestors. Indeed, one scarcely ever sees the word "infrastructure" without the inevitable qualifier, "crumbling." And few are willing to raise the gasoline taxes which pay for the repairs.

So the thing to do is give up. Lease those roads and bridges out. Let a private company collect the tolls, widen the lanes, and fill the potholes. They can make it work, and when they do, they will create jobs.

....Just to make sure Americans do the right thing, the pro-privatization worthies further suggested, in the words of a Reuters account, that maybe the coming federal stimulus package "should tie stimulus funds to private capital involvement." Apparently these privatization deals aren't sweet enough to sell themselves.

But there's good reason to be reluctant to privatize. It doesn't take an MBA to figure out that we didn't build our Interstate highways in order to create opportunities for venture capitalists. The purpose was public service.

Well over two centuries ago Adam Smith explained, in Wealth of Nations, how the public got what they needed, and it wasn't usually through 'public service'. It was by appealing to the selfish interests of producers of food, clothing and shelter. I.e., by offering money in return.

Some things couldn't be provided privately (or only with great difficulty) because there was no way to identify the beneficiaries and collect from their using them. Those goods and services were provided by governments and paid for indirectly (taxation). Which--as even Thomas Frank concedes in his WSJ piece--is a comparatively inefficient way to go.

So, what is Frank's problem with--now that the transponder technology exists to monitor usage of the formerly 'public good' of limited access highways and bridges--moving bravely into the 21st century, and adapting the superior (more efficient) method; charge very, very short term rental fees for the use of those highways?

How often does Frank see the adjective 'crumbling' accompanying the words apartment building? Or 'parking garage'?

Usually only when those things are owned and operated by government agencies, no?

Carbon Sink

To Davy Jones' Locker, think some scientists:

Plants remove CO2 from the air through photosynthesis, incorporating the carbon in their tissues. So dumping corn stalks, wheat straw and other crop residues into the deep ocean, where cold and lack of oxygen would keep them from decomposing, would in effect sequester atmospheric CO2 on a time scale of millennia.

In a world that celebrates high technology, the idea sounds too simple to succeed. But Stuart Strand of the University of Washington and Gregory Benford of the University of California, Irvine, concluded that crop waste storage would make more sense than other proposals for carbon sequestration, including gas storage, sequestration directly in the soil, planting of more forests to take up more CO2, and fertilizing the oceans to foster more algae growth. Their findings are published in the journal Environmental Science and Technology.

The researchers calculated that crop waste burial would be more efficient than some other methods and could be adopted sooner, in part because existing technology and infrastructure could be used. Stalks could be baled in the field, transported to ports and loaded on barges for deep-water dumping. The researchers suggest any environmental impact could be minimized by concentrating the dumping in one area.

They estimate that large-scale agriculture produces enough waste worldwide that dumping it in the ocean could reduce the global annual accumulation of CO2 by 15 percent.

The Devil...We Don't Know

If relying on foreign oil doesn't appeal, how about foreign lithium:

Demand for lithium, long used in small amounts in mood-stabilizing drugs and thermonuclear weapons, has climbed as makers of batteries for BlackBerrys and other electronic devices use the mineral. But the automotive industry holds the biggest untapped potential for lithium, analysts say. Since it weighs less than nickel, also used in batteries, it would allow electric cars to store more energy and drive longer distances.

With governments, including the Obama administration, seeking to increase fuel efficiency and reduce their dependence on imported oil, private companies are focusing their attention on this desolate corner of the Andes [in Bolivia], where Quechua-speaking Indians subsist on the remains of an ancient inland sea by bartering the salt they carry out on llama caravans.

The U.S. Geological Survey says 5.4 million tons of lithium could eventually be extracted in Bolivia, compared with 3 million in Chile, 1.1 million in China and just 410,000 in the United States. Independent geologists estimate that Bolivia might have even more lithium at Uyuni and its other salt deserts, though high altitudes could make producing the mineral difficult.

Amid such potential, foreigners seeking to tap Bolivia's lithium reserves must navigate the policies of [President Evo] Morales, 49, who has clashed repeatedly with American, European and even South American investors. Morales shocked neighboring Brazil, with whose government he is on friendly terms, by nationalizing its natural gas projects here in 2006 and seeking a sharp rise in prices. He carried out his latest nationalization before the vote on the Constitution, sending soldiers to occupy the operations of British oil giant BP.

At the La Paz headquarters of Comibol, the state agency that oversees mining projects, Morales's vision of combining socialism with advocacy for Bolivia's Indians is prominently on display.

Lost in Translaton

From Davos via India, Whatever:

Irresponsible naïve Obama is surrounded with incompetent junks that were running the country from behind the scene keeping Bush Administration in the front. Obama is not getting it.

Nobel laureate Joseph Stiglitz said any decision by President Barack Obama to establish a so-called bad bank to rid financial companies of toxic assets risks swelling the national debt.

Obama’s administration is moving closer to buying the illiquid assets currently clogging bank’s balance sheets and preventing them from boosting lending, people familiar with the matter said this week.

That amounts to swapping taxpayers’ “cash for trash,” Stiglitz said yesterday in a panel discussion at the World Economic Forum in Davos, Switzerland.

Back to the Future; Hip to be Square

It's not final for vinyl in the UK:

Digital music is accessible at the click of a button, CDs are portable and robust, and record players are rare to the point of extinction. Why would anyone buy vinyl in this day and age?

"To be really cool," says Mark Wadhwa, one half of the pair behind the Vinyl Factory, which in 2003 rescued the EMI vinyl pressing plant in Hayes from closure. "Everyone can download. If you've got a vinyl record you're different."

UK sales of seven inch singles increased from 180,000 in 2001 to more than a million in 2007, as young people discovered the format for the first time.

....Vinyl will remain a niche product, he says, but one made viable by the internet. "Before there might have been 500 people in the UK who would have bought a particular record on vinyl, now we can reach 200,000 people globally."

...."EMI from 1905 to 1970 spent millions of pounds perfecting the machinery that made their records," says Wadhwa. "The machinery was absolutely unique." As such, the Vinyl Factory has had to develop a method to hand-make replacement parts for the machines.

Fortunately the plant came with its staff, including a manager now pushing 80, whose parents worked there before him. Four highly skilled engineers have been retained to pass on their knowledge to the younger generation.