If a dog jumps in your lap,
it is because he is fond of you;
but if a cat does the same thing,
it is because your lap is warmer.
Alfred North Whitehead
Bernanke: JUST SAY 'NO'
This is not the first time I've wished that Senator Chuck Schumer's (D-NY) mom was there to slap the taste out of his mouth (or at least Cher). I'm furious with Fed Chairman "Helicopter Ben" Bernanke for manipulating interest rates into the ground, which not only rob savers and pensioners whom get rewarded for thrift by losing purchasing power of their money (and having to declare phantom "interest paid" (for taxes) which is already more than offset by inflation) and almost always encourages the wrong types of investments (like carry trades) and/or herd mentality malinvestments (like the real estate bubble).
Sen. Chuck Schumer, D-N.Y., exhorted Federal Reserve Chairman Ben Bernanke to stimulate the economy before November through some form of quantitative easing or other monetary policy, which Bernanke said could create jobs.
“Despite two false starts, we’re having a much rougher time than we ever imagined getting unemployment down,” Schumer told the Senate Banking Committee. “So get to work, Mr. Chairman.” Schumer said Bernanke needed to stimulate the economy because Congress refuses — “maybe after November we will,” he opined.I get the uneasy feeling that with the gloomy forecast Bernanke is giving the economy (stating the obvious about decelerating growth and hiring problems), QE III is imminent, although he is playing lip service to not getting in the middle of a partisan battle in an election year. For obvious reasons, Schumer is desperate: the election could very likely mean the Dems lose the Congress and the White House. He needs any good news that Bernanke can pull out of his hat for the Democrats to have any chance in November. If Bernanke thinks that the road to fiscal discipline is reelecting Obama and keeping the Senate in Democratic hands, he's delusional. Only one party has been talking necessary austerity.
A Word to the Strategically Inept Romney Campaign
I think it's phenomenal that Romney is staying close to Obama in the battleground states. Here is what Byron York says, among other things:
Obama, on the other hand, didn’t have to spend any money winning a Democratic primary. The result is that Obama is hugely out-spending Romney in key states. A recent Washington Post report said Obama has outspent Romney in Florida $17 million to $2 million, as of July 6. The numbers in Ohio were $22 million to $6.5 million, and in Virginia, they were $11 million to $3 million.How in the world does a smart man like Mitt Romney get in this position? One of the mistakes McCain did (probably because he knew he couldn't raise as much money as Obama and wanted the moral upper hand, but I seriously doubt that he got much mileage over the fact that Obama broke his word on a publicly financed election) was stick to the allocated sum, which not only allowed Obama to decimate McCain in Florida (where McCain originally had a 10-point lead), strictly on the basis of political ads, but McCain had to cede states like Michigan early, and all the Obama campaign had to do was threaten to put money, say, in McCain's home state of Arizona to run McCain ragged.
Over the last 2 days or so, I've seen at least 20 Obama (and no Romney) ads play on cable television. And it's the same type of crap: the latest is the one where Romney is singing "America the Beautiful" off-key (for God's sake, Mitt: get some voice lessons) while absolutely misleading ads are playing about Romney "investing in tax havens" in the Caribbean at Bain, offshoring jobs to India as governor, etc. (I have seen one source that explained that Bain Capital did related investments to the Caribbean, e.g., for pension funds; I believe that most of Romney's investments have been in a blind trust, i.e., although he owned the assets, he himself did not make the investment decisions. To blame Romney for his trustee's decisions is unconscionable.)
Let's take a look at the India charge:
At the time, many states were contracting with companies that outsourced some form of their work overseas. The Government Accountability Office found that in 2005, 43 states had contracts with companies administering state programs in which some of the work, primarily customer service and software development, was done overseas. Expenditures for services performed offshore were relatively small, the GAO found, and services performed offshore constituted a tiny fraction of the total services provided through the contracts.
Romney, then, was forced to weigh two competing interests: protecting jobs in his state vs. saving taxpayers money. The Globe pointed out that lawmakers in Kansas considered a similar measure but pulled the plug when they learned it would cost the state an additional $640,000. Massachusetts’ proposal was favored by labor unions but opposed by some economists who said it didn’t make economic sense for taxpayers to pay more for low-skill jobs.And I believe when the contracts were rebid/renewed, only a fraction remained in India, and any that returned went to other states. But this is clearly an attack by Obama's labor union crony supporters against the taxpayers of Massachusetts, just like the Wisconsin public sector unions wanted to continue to loot the state treasury under Scott Walker.
If I was paranoid, I might think the last part of the ad is a swipe at me, because one of my signature sayings in the blog is that Obama (and more government) is part of the problem, not the solution.
Let me be clear: the $5T debtor, super-spender and super-regulator didn't know enough about history to avoid repeating FDR's mistakes prolonging the Great Depression. His policies have not improved things: they've made them worse; he is still below break-even despite at least another 4M people entering the labor force; we have about a third of the average growth after past recessions at the same time the Fed Reserve has maintained the lowest rates ever OVER HIS ENTIRE TERM. Anyone who looks at this guy's record, whether it's his dithering on issues, expanding the involvement of America all across the volatile Middle East area, divisive politics, and mediocre to failing performance across the board has got to conclude that we've seen the best of whatever solutions Obama has to offer--and his only solution is to spend two-thirds more money than he takes in and America can't afford another term: my God, we are over the nation's GDP in debt for only the second time in our history (WWII), the credit bureaus have already downgraded out debt, we have the lowest labor force participation rate in 3 decades (and that was when we had a 20% interest rate which Obama hasn't had to face--yet)...
The Romney campaign has performed miserably: they vastly overspent Gingrich in Florida and in other states, and now they have run all but dry as Obama burns through his unopposed renomination fight campaign cash with dishonorable ads unworthy of a President, whom doesn't even have the testicular fortitude to stand on his own two feet and run on a positive agenda for his second term. We know why: morning in America isn't great when tens of millions of people either can't find a job or have to settle for whatever part-time work they can scrounge up.
Stop getting on jet skis, learn to eat in diners, stop whining about how unfair the Obama campaign is: if anything, I might run an ad poking fun of Obama. The guy has got a thin skin; he even gets annoyed at people making fun of his ears. I make jokes at my own expense in this blog all the time.
Obama is one of the most defensive politicians I've ever seen in my life, and there are 10 million ways you can pick at that personality defect. Let's face it: this guy was claiming that he would handle his mid-terms better than Clinton; you can't make this stuff up. He's thinks that he's smarter than he is, and he has a ginormous ego. You have to be careful with humor so that people don't think you're taking a cheap shot. I suspect that the Romney folks are biding their time and they've got lots of fuel in the tank. But the last 2 or 3 months reminded me of some of the ways McCain frittered the time away, pushing on strings like yet another trip to Iraq or Afghanistan: he knew he was going to get that vote anyway. What he needed to work on was the economy.
Whip Those Bankers! Whip Them Good!
The Daily Bell has a good essay today, "Bank of England Head Demands Immediate and Far-Reaching Bank Reforms". The Bank of England is Britain's version of the Federal Reserve (i.e., central bankers); initially it was privately held; the British subordinated its monetary policy to the government in the early 1930's, nationalized it after WWII, and then in 1998 the Bank became an independent entity, wholly owned by the government (no longer controlling monetary policy).
When I hear Sir Mervyn King--the British counterpart to Ben Bernanke--and PM David Cameron engaging in populist-style attacks on a banking culture of greed and arrogance towards the ordinary customer, I'm automatically skeptical: it's all about public posturing, not problem resolution.
Make no mistake: I have little sympathy with those bankers who always seem to find a way in a regulated system to take unanticipated, costly undue risk. But unlike the Greenbackers (at the risk of oversimplification: the problem with banking is its private ownership and the solution is public ownership and operation) and OWS wants to punish those nefarious bankers, we libertarians think that these two converging sets of protesters have entirely missed the point.
The best type of regulation is the free market, competition and being vested in the consequences of one's business decisions. Government is morally responsible for the chaos and consolidation it artificially creates in the market through propagation of unnecessary regulation, an inferior alternative, a poor substitute for real competition, made necessary because government has manipulated the industry into an oligarchy. Government regulation is based on the past and is not indicative of future performance. It is a synthetic, static emulation of natural, dynamic competition.
Think of it: suppose there is a group of elite, powerful people whom work behind the scenes--not the ones being signaled out: what do you think would benefit them--a largely decentralized authority with hundreds of banks competing for customer deposits, based on customer-driven criteria like safety and customer service, or useful idiots creating a system where smaller banks can't compete because they don't qualify for "too-big-to-fail" or other elitist picking winners and losers?
Paradoxically--and I think most young people don't grasp the concept (not that their progressive professors are any better)--the best thing we could do for banking (and business in general) is to streamline inefficient, ineffective government: we need a smaller government, which will lessen the need for taxes and will thus spend and regulate less.
Grade Inflation: At All Levels
We Need Tougher Standards
Of course, we have one Barack Obama whom has given himself a solid B+--but an A- if he managed to get health care passed...
Then we find "Helicopter Ben" Bernanke, chairman of the Federal Reserve, whom wants to help the Congress out in deciding what kind of grade he deserves (no reaction yet from Congressman Ron Paul):
Bernanke praised the measures that he had previously undertaken to stimulate the economy.
“My own assessment is that quantitative easing and Operation Twist have been effective in supporting economic recovery,” Bernanke said, taking credit especially for launching the apparent economic recovery in 2009.Now let's get to that topic Barack Obama can't seem to stop pushing: bailouts of states and municipalities for those teachers. Contrary to expectations, I am not anti-teacher: one of my paternal aunts, my favorite, was a career teacher, first as a Roman Catholic sister (nun), then in the public schools. One of my sisters and at least two cousins have education degrees, and two of my nieces are public school teachers; of course, I'm a former full-time professor.
I know first hand, from teaching college students in Texas, Wisconsin, and Illinois, about grade inflation in high schools and college. Although I was somewhat more liberal with grades than I experienced as a student (I had the only A or one of less than a handful of A's in several classes), I had higher standards and expectations than my fellow professors in my discipline across the board; how do I know? Because they wrote as much on their teacher evaluations. And they docked my scores accordingly (a fear raised by other professors in the first article below).
Before going on below, I should point out that Mark Perry has written a number of posts on this topic across majors or high school students (e.g., see here and here) and cites this Minnesota article ("At U, concern grows that 'A' stands for average"):
A University of Minnesota chemistry professor [Christopher Cramer] has thrust the U into a national debate about grade inflation and the rigor of college, pushing his colleagues to stop pretending that average students are excellent and start making clear to employers which students are earning their A's. "I think we are at serious risk, through the abandonment of our own commitment of rigorous academic standards, of having outside standards imposed upon us." National studies and surveys suggest that college students now get more A's than any other grade even though they spend less time studying.
What makes those findings [of skewed high curriculum grade distributions] especially striking is that education majors score significantly lower on standardized college entrance exams like the SAT and ACT than students majoring in other academic areas like science, business, social sciences and humanities. In other words, it’s a case of the least academically qualified college students on campus getting the highest grades and GPAs... In a larger sample of large public universities, Professor Koedel finds that the average course-level GPA for education departments is 3.66.
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| Courtesy of Koedel/AEI |
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| Courtesy of Koedel/AEI |
Political Humor
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| Courtesy of Carpe Diem |
Frédéric Bastiat's original parable (my edits):
Have you ever witnessed the anger of the good shopkeeper, James Goodfellow, when his careless son happened to break a pane of glass? Suppose it cost six francs to repair the damage, and you say that the accident brings six francs to the glazier's trade—that it encourages that trade to the amount of six francs—I grant it; I have not a word to say against it; you reason justly. The glazier comes, performs his task, receives his six francs, rubs his hands, and, in his heart, blesses the careless child. All this is that which is seen.
But if, on the other hand, you come to the conclusion, as is too often the case, that it is a good thing to break windows, that it causes money to circulate, and that the encouragement of industry in general will be the result of it, you will oblige me to call out, "Stop there! Your theory is confined to that which is seen; it takes no account of that which is not seen."
It is not seen that as our shopkeeper has spent six francs upon one thing, he cannot spend them upon another. It is not seen that if he had not had a window to replace, he would, perhaps, have replaced his old shoes, or added another book to his library. In short, he would have employed his six francs in some way, which this accident has prevented.At the risk of oversimplification, Keynesians believe that government spending is more worthy, i.e., has multiplier effects, e.g., the glazier takes the shopkeeper's 6 francs and spends them on other things, and so on, the net effect being more than 6 francs added to the economy. Bastiat's point is that no wealth is created by this transaction, that the shopkeeper would have been better off spending or investing the 6 francs otherwise.
I would have been a bit more mischievous with the cartoon, e.g., dictate only certain domestically-produced windows would qualify for replacement, installation must be performed by a certified glazier, a building inspector must approve the repair, and the next window is 20 yards away...
Late Night Jokes
A new poll found that 54 percent of Florida voters think the country is on the wrong track under President Obama. While the rest of Florida’s voters still think Teddy Roosevelt is president. - Jimmy Fallon
[Obama insists that Floridians between Orlando and Tampa would have been on the right track, but Governor Scott blocked government funding for the high speed rail project.]
The big news in Washington now is the disappearance of Congressman Jesse Jackson, Jr. Nobody can find him. He's completely disappeared. People think he's either in rehab or he might have been given his own show on CNN. - Jay Leno
[Rumor has it that he's in the last place anyone would think of looking for him--that's right: one of Mitt Romney's houses.]
Last night I went out for Chinese. I picked up a Team USA Olympic uniform. - Jay Leno
[Well, Obama's favorite billionaire Warren Buffett started buying Chinese suits from Dayang Trands (no doubt with all that Bush tax cut money) and spread the word around, to Bill Gates and others. Nobody would have known about the uniforms except the tags read "Born in the USA"... And just like Madame Li learned how the Japanese manufactured suits by visiting a factory, she also observed how Hawaii makes birth certificates...]
Musical Interlude: My Favorite Groups
The Who, "Squeeze Box". This completes my limited series on The Who. Next, I'll briefly cover the Babys.
