TigerHawk

There is a distinct challenge in writing for the New York Times about financial matters, especially stories regarding underwater mortgages. The Times makes its point of view clear in the way it positions key quotes and how the story is edited -- the "angle" is usually fairly obvious. Over the last two weekends, The Times has thread a very narrow needle -- that loan modifications are a good thing, but not if any financial institutions might actually make money by underwriting the effort and helping to restructure the mortgages one by one; and, the Obama administration is correct in bringing pressure to bear against mortgage companies to get them to reduce payments for upside down homeowners.

On November 22, this story by Louis Story ran, entitled "Wall St. Finds Profits by Reducing Mortgages."

As millions of Americans struggle to hold on to their homes, Wall Street has found a way to make money from the mortgage mess.

Investment funds are buying billions of dollars’ worth of home loans, discounted from the loans’ original value. Then, in what might seem an act of charity, the funds are helping homeowners by reducing the size of the loans.

But as part of these deals, the mortgages are being refinanced through lenders that work with government agencies like the Federal Housing Administration. This enables the funds to pocket sizable profits by reselling new, government-insured loans to other federal agencies, which then bundle the mortgages into securities for sale to investors.

While homeowners save money, the arrangement shifts nearly all the risk for the loans to the federal government — and, ultimately, taxpayers — at a time when Americans are falling behind on their mortgage payments in record numbers.

For instance, a fund might offer to pay $40 million for a $100 million block of mortgages from a bank in distress. Then the fund could arrange to have some of those loans refinanced into mortgages backed by an agency like the F.H.A. and then sold to an agency like Ginnie Mae. The trick is to persuade the homeowners to refinance those mortgages, by offering to reduce the amounts the homeowners owe.

The profit comes when the refinancings reach more than the $40 million that the fund paid for the block of loans.

The key quote is a bit further down in the article:

“From the borrower’s point of view, landing in a hedge fund or private equity fund that’s willing to write down principal is a gift,” said Howard Glaser, a financial industry consultant and former official at the Department of Housing and Urban Development.

He went on: “From the systemic point of view, there is something disturbing about investors that had substantial short-term profit in backing toxic loans now swooping down to make another profit on cleaning up that mess.”

(Emphasis added)

There are a couple of problems with Glaser's comment. First, as I believe the article makes clear, the identity of the equity investors who are picking up distressed mortgage pools isn't really known, so perhaps these investors have nothing to do with the original parties "backing toxic loans." Second, no matter who they are (even if it is in fact the same investor groups), it is hard to criticize risk capital when everybody wants somebody to step up and catch a falling knife. Yes, the workout groups have a waiting customer for the new paper, thanks to F.H.A. and Ginnie Mae and their new marching orders; but, being able to purchase a pool for 40 cents on the dollar, go through each individual mortgage and modify it in a way that works for the new lender and the borrower (given the new reality of local market conditions), and then repackage the pool and sell it at 55 cents on the dollar, all of that actually takes some work, diligence and know-how, which might be in part motivated by (gasp!) the profit incentive. It is possible, even likely, that some of the pools acquired for 40 cents are actually worth 30 cents, once all of the modifications are plowed through. So if the investor groups lose a dime on each dollar and then flip the new pool to F.H.A., that would be OK with Glaser? Finally, some of the modifications will be granted to borrowers who must have had a rough idea of what they were doing when they signed up for the original mortgage, and presumably nobody had a gun to their head. This is a nice little win for the homeowner who could not reasonably be described as the target of a predatory lending scheme hooking unsophisticated borrowers. The "rube" paper is co-mingled with the "willing and knowledgeable participant" paper; indeed, if I'm doing the loan mod for the investor groups, I want somebody with a clue on the other side of the table from me, and I want to walk away feeling fairly certain that the revised monthly payments will come in like clockwork, otherwise my mortgage pool is still crap.

On November 29, a week after the piece above, Peter S. Goodman wrote a front page article entitled "U.S. Will Push Mortgage Firms to Reduce More Loan Payments."

The Obama administration on Monday plans to announce a campaign to pressure mortgage companies to reduce payments for many more troubled homeowners, as evidence mounts that a $75 billion taxpayer-financed effort aimed at stemming foreclosures is foundering.

“The banks are not doing a good enough job,” Michael S. Barr, Treasury’s assistant secretary for financial institutions, said in an interview Friday. “Some of the firms ought to be embarrassed, and they will be.”

Even as lenders have in recent months accelerated the pace at which they are reducing mortgage payments for borrowers, a vast majority of loans modified through the program remain in a trial stage lasting up to five months, and only a tiny fraction have been made permanent.

Mr. Barr said the government would try to use shame as a corrective, publicly naming those institutions that move too slowly to permanently lower mortgage payments. The Treasury Department also will wait until reductions are permanent before paying cash incentives that it promised to mortgage companies that lower loan payments.

“They’re not getting a penny from the federal government until they move forward,” Mr. Barr said.

Right, "the government would try to use shame as a corrective," because, well, that always works. I know I respond really well to someone wagging a finger at me and saying, "Shame on you!" If I'm the president of one of those institutions, it's not like I want to have that paper on my books -- heck, show me a way I can make it go away and I can still keep my job, I'm in, just don't give me a moving target.

So, loan modifications are good, provided that nobody on Wall Street actually makes money in the process, and that the pain is borne slowly by the institution holding the original paper, since it ought to do the modifications itself (and not sell the mortgage at a discount, lest the new equity have a chance at making money), or be shamed by the government because of its lack of effort. That is quite a needle to thread.

Permalink - - Main

(4) Comments

With any luck, I'll be on a flight to Dallas by the time you read this, not to return from Texas until Thursday. Never fail, blogging will continue apace, perhaps with a few Texan similes thrown in for good measure. None of that, though, will prevent me from doing my duty: Supplying you with the link to the massive "Cyber Monday" deals page at Amazon. Shop like a banshee, and be done by noon. Your boss will never notice.

(2) Comments

It's a good thing that Democrats are too principled to use "Willie Horton"-style political advertising, or this would hurt Mike Huckabee.

CWCID: Glenn Reynolds.

(8) Comments

Almost exactly six years ago, Guardian writer Tim Radford selected his top ten list of "all-time favourite science scams," credibly headed by the Piltdown man mystery.

Whether or not the planet is warming, cooling, or staying about the same, and whether or not modern human activity contributes significantly to any changes in climate, it seems to me that ClimateGate is a much bigger scandal than anything on Radford's list. The scope of the academic dishonesty is remarkable -- the disregard for the long-accepted practices of the scientific method with respect to legitimate peer review, the self-serving thumb-on-the-scale grant money grab, and the audacity to propose and insist that the now-compromised climate models be used to re-engineer the global economy at a cost of trillions of dollars, all make Piltdown man seem minor by comparison. I think we have a new Number One. The CRU people might be lucky to get new jobs as professional wrestling referees.

I should add that I basically agree with TigerHawk's implied position that it is entirely possible that the activities of 6.8 billion people may well have an impact on the climate. It is observable that more densely populated areas experience environmental changes during growth, so if humans can locally alter the ground and the flow of water, it may be premature to rule out the notion that we can't or don't alter the climate. We are apparently not at a point, however, where the "science is settled."

The U.S. has compelling national security reasons to reduce its dependence upon foreign oil, probably leading to the development of non-fossil fuel alternative energy sources. I will continue to be a thrifty, skin-flinty Yankee, keeping the house cool in the winter and warm in the summer, and generally try not to be wasteful. Of course, I do so out of choice, with no real desire to compel anyone else to conform to my habits, which disqualifies me from becoming a Gorebot.

Every scam requires a mark -- in the case of Piltdown man, it was principally the curators of the Natural History Museum in London, where the skull was on display for four decades -- so the question remains, why are so many well-educated elites willing to swallow the entirety of AGW whole?

Permalink - - Main

(25) Comments

I'm not going to rehash the news on the non-default of Arab Emerite Dubai (aka Du-Sell). The financial blogoshere is on the case if you want to monitor unfolding details. Essential blogs Calculated Risk and Naked Capitalism are but two of many that should be checked daily.

Zero Hedge has plenty of interesting speculation about financial exposures to Dubai and whether, or to what degree, Abu Dhabi will step up and honor Dubai's obligations. The Abu Dhabi "shadow" guarantee was apparently so assumed by the market that their less than complete assumption of Dubai's debt has raised fears about their own financial capacity, bringingt a corresponding drop in the price of their obligations. The market is scared again.

I found this line of thinking interesting and disturbing, and a good example of why the site is not highly regarded in all circles.

Let us wonder aloud:

Question: If you are Abu Dhabi, why permit a newsbreaking stand-still request and pop your own cost of capital along with the rest of the region? Surely, you saw this coming long ago?

Question: If you are Abu Dhabi, how might you have hedged your exposure to Dubai? (And who is your counterparty exactly)?

Question: If you are Abu Dhabi, and Dubai had already done all the dirty work of recruiting and deploying slave labor to build the modern version of the Hanging Gardens of Semiramis, mightn't you be quietly buying up distressed Dubai debt just now?

The information asymmetries are huge in this case. Particularly in the Middle East that's usually a hint that foreign investors are going to get their lunch money lifted, find themselves framed for the crime by local authorities when they complain, imprisoned by the uncle-of-the-thief (who also happens to be a judge) immediately before being repeatedly raped while in custody, caned and then deported "accidentally" to Azerbaijan.

Truth or asshattery? You decide.
(2) Comments

Here's a nifty (if somewhat portentious and one-sided) video that rolls through the ClimateGate controversy in rogues gallery style. A few comments below.

Some of this is a bit over done; not every suspicious turn of phrase in a conversational email hides a conspiracy, and anybody who has worked in a large organization knows that. It is also true that people in all organizations vent about outsiders who threaten to knock down the door as Steve McIntyre, to his credit, does all the time. The emails alone prove nothing.

The problem, of course, is that these emails are not in a vacuum, but are to be read in the context of two wholly unrelated revelations: (1) The deletion, intentional or otherwise, of the CRU's original raw global temperature data, so it is apparently no longer possible to assess whether the "adjustments" to that data were valid or even intellectually honest; and (2) the exposure of code inside the climate models themselves that seems to indicate a direct tweaking of the programming to generate a particular result (i.e., a palpable warming trend). This is really, really, really, really bad stuff, because the entire case for regulatory intervention turns on the predictive power of these models. If the data that is their basis and the the programming itself has been manipulated in any way, shape or form to drive a result intended to influence policy, then all the scientific papers that derive from these models or rely on them in any way ought to be withdrawn.

Finally, the other value in the video is its publicity of the CRU's mission, which quite consciously fuses science with the making of policy. This embeds within one organization, and therefore one group of people, the dual responsibility of determining what is happening and what we ought to do about it. As anybody (CWCID: Glenn) who has taken even a single day of philosophy knows, one can never derive what ought from what is. While it is theoretically possible for an individual to maintain complete separation of what ought from what is in his or her professional life, that would seem virtually impossible for an organization, which has its own bureaucratic imperative, to do. The first consequence of this scandal, therefore, ought to be the clear separation of the science from the policy, so that the people working on the former do not work on or advocate for the latter, and vice versa, at least not in any official capacity. (Yeah, I know I just leapt from is to ought, but I do not think I need to restate the entire philosophical case against bureaucratic conflicts of interest in this one post.)

(43) Comments

The Times of London is reporting in its Sunday edition that the Climatic Research Unit at the University of East Anglia has destroyed the original data used to construct the historical climate record that purports to show a temperature increase. That is, the hope that independent scientists could assess the "adjustments" made to the raw data is now dashed, for the raw data no longer exists. This fact has actually been known for months, but the mainstream media ignored it -- no doubt intentionally -- until the email scandal broke last week.

SCIENTISTS at the University of East Anglia (UEA) have admitted throwing away much of the raw temperature data on which their predictions of global warming are based.

It means that other academics are not able to check basic calculations said to show a long-term rise in temperature over the past 150 years.

The UEA’s Climatic Research Unit (CRU) was forced to reveal the loss following requests for the data under Freedom of Information legislation....

In a statement on its website, the CRU said: “We do not hold the original raw data but only the value-added (quality controlled and homogenised) data.”

The CRU is the world’s leading centre for reconstructing past climate and temperatures. Climate change sceptics have long been keen to examine exactly how its data were compiled. That is now impossible.

Roger Pielke, professor of environmental studies at Colorado University, discovered data had been lost when he asked for original records. “The CRU is basically saying, ‘Trust us’. So much for settling questions and resolving debates with science,” he said.

So, basically we are being asked to restructure the entire economy of the planet on the say-so of a few "scientists" whose work cannot be verified or even reconstructed. Is there any intellectually honest person who thinks that is a good idea?

In a few days this has gone from being a kerfuffle over a few snotty emails and some academic source code to a full-blown political and policy catastrophe. Any government that supports greenhouse gas regulation based on the reports of the Intergovernmental Panel on Climate Change, which relied heavily on the CRU data, would be derelict in its own obligation to do due diligence. Climate "skeptics" have been saying this for some time and dismissed as cranks for it. Months ago conservative bloggers were writing that these data had been destroyed (based on an admission on the CRU's own web site), but the mainstream media sat on the story as if it were irrelevant. Now, with the excuse of the CRU hack, even the Times of London is writing about it breathlessly.

Better late than never, but it still leaves this scary question: What if these wholly discredited "scientists" who threw away their raw data and are asking us to change the world on their say-so are actually right?
(57) Comments

My brother and I and our respective eldest children went to UVA's Scott Stadium this afternoon to see Virginia Tech and the University of Virginia do battle for state bragging honors and a commemorate cup. We were divided, brother again brother, cousin against cousin, and (not surprisingly) Tech came out on top and then some after a rocky start. A few pics, then, for those of you who could not be there.

Even a Princetonian could feel at home with this much orange...

"V" is for Virginia, not victory. At least not this year.

The Cavalier has perhaps the best job in all of college mascoting (yeah, the USC Trojan has a less dignified costume, does not gallop as fast in my recollection, and has to go by the name of "Trojan," which is a problem).

Typical Virginia Tech fan...

(9) Comments

Answer: When the New York Times decides to call him an "environmentalist."

The headline reveals a certain way of thinking at the Times -- that arson might be a sort-of respectable tactic in pursuit of a higher cause. You know, in the tradition of Howard Roarke, perhaps. But does this conflation of criminality and environmental "activism" really help the cause of the environment in the long run? Perhaps it does among the readers of the New York Times, but I suspect not among Americans with less clouded moral vision.

(10) Comments

We drove a few miles south of Charlottesville to visit an uncle of mine, who lives in a house that has been in his family since it was built in 1797. Its name is "Sunnybank," which certainly made sense this morning. Look at the bark on that sycamore shine.

Yes, that is an old Citroen, which he drives down to the corner store for a newspaper every morning.

(5) Comments

Well done, thank you.

Sheesh.

MORE: Penn State opens an investigation of Michael Mann, developer of the historical temperature data that reveals the apparent "hockey stick" rise in temperature.

(2) Comments

There's a lot going on in the world, but I have more time for linking than thinking this morning, so a tab dump it is.

All about the history of statins, Lipitor, and what the expiration of its patent means for Pfizer. Sounds boring, but isn't.

The supply of oil: "splitting the difference" between optimists and pessimists.

John Burns, one of the NYT's truly great reporters, ruminates on Afghanistan and President Obama's looming decision to send more soldiers to fight there. I have decried Obama's indecision on previous occasions; he does not seem to understand the importance of showing decisiveness in addition to actual deliberation. But, if he has used this time to develop a clear argument for our mission there he will have used his time wisely (and, I might add, clearly surpassed his predecessor in at least one aspect of our national security policy).

The gender gap in unemployment.

The unemployment rate for men, 11.4%, based on seasonally adjusted data from the Bureau of Labor Statistics, outpaces the rate for women, 8.8%. We now have the largest jobless gender gap since tracking became possible in 1948. The gap reached its previous peak, 2.5 points, in 1967 and 1978. Today's gap has exceeded that for three months. It's endured at two points or above for an unprecedented length, eight months and counting.

One would think that this would get more attention from the outcomes-oriented folks who parse statistics to find evidence of discrimination.

A climate scientist who has destroyed her career engages the skeptics. It's probably safer, figuratively speaking, to be a Palestinian who engages the Israelis.

What ClimateGate says about the legacy media. As if you needed reminding.

Norway, of all countries, decides that the Islamic Republic of Iran is run by brutish thugs. Of course, the Norwegians have long used the Nobel Prize to make one or another political point against the hope, really, that it would insulate the recipient against the bad guys. Now that Iran has apparently called that bluff the game is probably over; the Nobel Prize may in the future amount to a target, rather than a shield.

More later, if I get back to my computer before I set out for the UVA-VT game.
(4) Comments

The TigerHawk Teenager and I roamed around Charlottesville this afternoon, and I snapped a few pictures...

A new rule: All college town pedestrian malls look alike. Charlottesville's is virtually identical to Iowa City's...

A brass band, playing to raise money for a food bank named for -- who else? -- Thomas Jefferson...

Miller's, which is a very nice bar...

A good use for an old garage...

Mr. Jefferson's university...

The Lawn...

Columns, columns, everywhere...

And, finally, The Corner...

(8) Comments

During our stroll around Charlottesville this afternoon, we stopped by the New Dominion Book Shop on the pedestrian mall in the old part of town, and I bought -- appropriately, I would say -- John Derbyshire's We Are Doomed: Reclaiming Conservative Pessimism. After arguing that the Founding Fathers were fundamentally pessimists, at least about human nature and the ability of governments to do anything about its worst instincts, Derb points the finger:

The optimistic rot set in as Calvinism gave way to Unitarianism in the later eighteenth century. Th 1805 election of Henry Ware Sr., a Unitarian, to the Professorship of Divinity at Harvard University prepared the way for the great liberal-optimist flowering of the Transcendentalist movement in the 1830s and 1840s. Henry Ware Jr., the professor's son, was friend and mentor to Ralph Waldo Emerson, a key progenitor of modern smiley-face liberalism, and a person who, in my opinion, ought to be burned in effigy at the commencement of every conservative gathering.

Hmm. Burning Emerson in effigy. I admit, I had not thought of that, but it could be fun. There are not nearly enough effigy burnings for my taste -- somehow it fell out of fashion -- but restarting the tradition with Emerson might be just what we need to restore its patina of respectability.
(9) Comments

From my inbox this morning:

Let me get this straight.

...we're going to pass a health care plan written by a committee whose chairman says he doesn't understand it,

passed by a Congress that hasn't read it but exempts themselves from it,

to be signed by a president that also hasn't read it and who smokes,

with funding administered by a treasury chief who didn't pay his taxes,

all to be overseen by a surgeon general who is obese,

and financed by a country that's nearly broke.

What could possibly go wrong?

My more considered thoughts, which more or less add up to the same point, here.
(3) Comments

Williams-Sonoma snubs the wrong teenager. Retailers and other service businesses would do well to remember the old saw, "treat everybody as if they are loved by a blogger with 500,000 readers a day."

(2) Comments

What Glenn said. On the small chance you did not know it, I and other bloggers get a little tip whenever you, our devoted readers, buy anything through a link on this blog to Amazon (and not necessarily the thing linked to). It costs you nothing, and gets me something. Even better, I give all the proceeds (and then some) to charity. Yeah, money is fungible so I probably have more money to spend or invest in something productive, but at least you know that Amazon's giving it up to bloggers instead of keeping it for their own greedy stockholders!

And, of course, if there are other bloggers who are more worthy, by all means buy your stuff through them. Just look at it as an opportunity to put a little coin in the pocket of somebody who entertains you.

Anyway, to that end I've posted the "Black Friday" link below, and also added it to the sidebar to the right, just below the Google ads so you can go back time and again. Click away, and maybe you'll find a great gift for a loved one!

(0) Comments

The right side of the blogosphere is in a Thanksgiving tizzy over today's news that New Zealand's climate studies center has manipulated (or "adjusted") temperature data over the last century to show lots of warming when the raw data shows very little. Coming as it does in the wake of the leaked email scandal at the Climate Research Unit at East Anglia University, climate alarmists are on defense in the mainstream media for the first time, well, ever. This is annoying to them, because it threatens to change the political circumstances over the global deal to regulate greenhouse gas emissions.

It probably ought to be said in this moment of passion that temperature data needs to be adjusted to make it reasonably consistent over time. Temperature stations are moved, or the environment around them has changed, so the data from the same station may not be comparable over time. If a station was once in a meadow shaded by trees and now sits at the edge of an asphalt parking lot, you need to account for that or you cannot compare data from years past to the present. (Here is a summary of some of the data integrity issues, written from a skeptical perspective.) The result is that surface station temperature readings all over the world are adjusted -- routinely -- to generate the data series that policy wonks are using to justify their proposals to regulate virtually all economic activity around the world.

There are at least four problems.

First, the slope of warming diminishes considerably if you exclude the adjustments. This was true in New Zealand, and it is true in lots of other local data around the world. As I understand it, a large part of the case for historical warming lies in the adjustments.

Second, it did not take the CRU document leak to know that many if not most of the scientists performing these adjustments are not only interested in determined what is, but in influencing what ought. They are not only describing a version of reality, as scientists are supposed to do, but using their description to advance a policy agenda. NASA's James Hanson is the leading exemplar of this phenomenon, but there are obviously many others. This conflation of science with policy advocacy makes it especially important that all matters of judgment, including especially the adjustment of raw data, be completely transparent.

Third, for reasons legitimate and otherwise, the data adjustments have not been transparent to scientists, journalists, and interested citizens outside the climate specialist community. The Kiwis have not released their adjustments, and actually refuse to do so in the linked article. In at least one case, the raw data has been lost or destroyed, so there is no way to examine the changes that were made. Steve McIntyre, the increasingly expert blogger who runs Climate Audit (and who earned mention in today's Wall Street Journal editorial), is repeatedly stonewalled in his efforts to get the same data (which has almost always been created using public funds) that the insiders have used to produce the "official" record.

Fourth, it is increasingly clear (especially from the computer code that drives the climate models) that neither the science behind what has been (studying the historical climate to see what happened) nor the construction of the models that purport to tell what will happen have been subject to the internal controls and quality systems that we require of, say, medical technology companies that produce and validate software that will be used to diagnose or treat an individual human being. It seems to me that we the voters ought to require the detailed validation -- and there are "internationally accepted" methods for doing this, to coin a phrase -- of any computer model cited as justification for any policy intervention. After all, lives hang in the balance.

The result, as writers as politically diverse Richard Fernandez and George Monbiot point out, is the expiration of "social proof" as sufficient to win the case for anthropogenic global warming. Increasingly, the average concerned citizen without a particular ax to grind will no longer trust the climate scientists simply because they say so, or because Al Gore says so on their behalf. So how do we regain that trust? By agreeing that we will not use data or the output from climate models to inform public policy unless they have been developed according to established quality systems for mission critical software and have been audited accordingly by a genuinely disinterested third party. Because of the implications for the global economy and the well-being of literally billions of people over the next century, requiring that the models and the data used to feed the models be subject to at least the process control and auditing that we would require of a medical device seems the absolute least we should do.

(58) Comments

Even I believe that we need to change the way we pay for health care because we are not getting good value for our money in this country, but it is increasingly obvious that the Democrats have put forth legislation that does not clearly do anything other than to create a massive new entitlement and taxes to go with it. Only weeks ago, few people who would be affected by the proposed legislation were willing to say this out loud; rumors swirled through the various sectors of the health care industry of chilling calls from the White House staff, muttering dark warnings to individuals and businesses that speak out too loudly against the Democratic bills. Now, though, the dean of the Harvard Medical School is speaking out, and the non-Wall Street Journal/Fox mainstream media is actually publishing what he has to say (bold emphasis added):

One of the White House's biggest boasts about the health care legislation now moving through Congress is that it should reduce health care costs for both government and society.

Many prominent experts are skeptical, however, and some say that the Obama administration's wrong.

"There are no provisions to substantively control the growth of costs or raise the quality of care. So the overall effort will fail to qualify as reform," Dr. Jeffrey Flier, the dean of the Harvard Medical School, wrote in The Wall Street Journal on Nov. 18. "In discussions with dozens of health care leaders and economists, I find near unanimity of opinion that, whatever its shape, the final legislation that will emerge from Congress will markedly accelerate national health care spending rather than restrain it."

Read the whole thing, and particularly note this:

From 2020 to 2029, while the CBO said that health care savings should cause deficits to drop sharply, it also warned that any precise forecasts "would not be meaningful because the uncertainties involved are simply too great."

As a result, "the honest answer is that nobody knows" whether meaningful savings are possible, said Robert Bixby, the executive director of the Concord Coalition, a bipartisan budget watchdog group.

Unfortunately, we -- including the Congressional sponsors of this legislation and virtually all experts -- are uncertain about a lot more than the long-term impact on the federal budget. The ugly truth is that nobody understands what the impact of this legislation will be on health care in general, the various industries, or the innovation of new technology that can make our lives better and longer. Nobody knows. Not the smartest surgeons you will ever meet, not portfolio managers who make it their business to be expert in health care and invest billions of dollars based on that expertise, not the sharpest securities analysts, not the CEOs or CFOs of hospitals, pharmaceutical companies, insurance companies, or medical technology companies, not academics who study public policy, not the lobbyists who are fighting for or against this legislation (or to avoid taxes and get benefits for their particular clients), and definitely not the key players in the United States Congress and the Obama administration. I know this, because I talk to many of these people in my day job. Nobody knows what will happen as the result of this legislation, other than that more people will have some form of insurance coverage and the "rich" will pay much higher taxes to make that happen. The rest of it is a leap in the dark.

Isn't that reason enough for any responsible person to oppose this legislation?
(12) Comments

Tradition requires me to post the link to Amazon's "Black Friday" deals, which are available now through the link. Mock the fools rising early tomorrow for real-space deals and buy your holiday gifts now through the magic of the internets.

(0) Comments

There are many lessons of Thanksgiving and the Pilgrims. This one is perhaps the least appreciated and most consequential.

CWCID: Glenn Reynolds.

(5) Comments

I'm sort of a sucker for lists, and Amazon has compiled a page of "best" movie and television DVDs lists, including picks by editors and audiences. Click through and buy a few for, you know, the heads of state that you might call upon during the holiday season.

(1) Comments

We generally do not link to NSFW pages, but all rules are made to be broken and it is, after all, Erev Thanksgiving. Besides, who but the worst bluenose would object to a body-paint tribute to our nation's armed forces?

Happy Thanksgiving.

(1) Comments

Senator Kent Conrad (D-N.D.) would probably like to redo this interview with CNSNews.com, the low light of which was his statement "if people don't believe in our system, maybe they ought to go somewhere else,” made in defense of the decision to try KSM and others in a civilian criminal court in Manhattan:



While it is oddly entertaining to see or hear a Democratic Senator use the "America, love or leave it" line, generally speaking, national politicians don't want to go there. It makes them sound like MSNBC's Keith Olbermann, who earlier this year suggested it was time for former VP Dick Cheney to leave the country.

More to the point, even the people involved in the decision to try KSM in New York can't precisely state what "the system" is for such cases in the future. My impression of Attorney General Holder's comments was that the venue for each case would be considered individually, so Senator Conrad did not need to get so huffy.


CWCID: CNSNews

Permalink - - Main

(4) Comments

One person's list of the 133 top conservative blogs. Considering the company and -- frankly -- the tiny amount of time I have devoted to blogging in the last couple of months, we are grateful for our ranking.

CWCID: Linkiest.

(2) Comments

The difference between "stuffing" and "dressing" explained. Put that way, I'm for dressing.

(2) Comments

Israel and Hamas are negotiating the release of Gilad Shalit, the Israeli soldier held captive by the terrorist group for more than three years. The price: "hundreds" of Palestinian prisoners. Palestinians will no doubt regard this as a great coup, winning the release of so many of their own for just one Israeli. Until, perhaps, they think about it a little. After all, the "exchange rate" says a great deal about how the two countries value the lives of their own people and human life in general. In case we needed to be reminded.

(5) Comments

Yet another reason why Angelina Jolie is the real deal.

(7) Comments

Paul Kedrosky has a curious graph from a JP Morgan research report that purports to show the private-sector experience of cabinet secretaries, by administration, since Theodore Roosevelt.

It is not obvious from the graph that one can relate the quality of an administration's cabinet to experience outside of government, but perhaps the graph does explain why the Obama administration does not seem to understand the impact of uncertainty on economic growth. It piles on the stimulus, but does not comprehend that we will not get sustainable growth until the federal government removes or resolves the massive regulatory and legislative uncertainty that hangs over a huge proportion of the economy like a sword of Damocles. Who in their right mind would decide to make a big new investment before the administration has clarified the threatened new regulation of health care (17% of GDP), financial services (9% of GDP) and energy (8% of GDP), not to mention the staggering but still unclear increases in business and individual taxes? Everybody outside of government knows that legislative, regulatory, and taxation risks are now the biggest obstacles to economic growth. The question is whether anybody inside government understands that.

MORE: Great minds think alike. The editors of the Wall Street Journal were thinking the same thing this morning. After noting that the stimulus has not delivered anything like the advertised results, the editors drop a dime on regulatory uncertainty (emphasis added):

The panicked Democrats' biggest problem is that Congress and the President have erected the biggest overhang of economic policy uncertainty that anyone can remember.

One big difference between Washington and private markets is that politicians think everything they do is free-standing. Markets, however, combine all the potential costs of Washington's policies and then decide whether to invest, or not. Consider what private decision-makers see in their future:

A 2,074-page, trillion-dollar health-care bill to redesign 17% of the U.S. economy. A carbon tax—cap and trade—that remains an Obama priority ahead of the Copenhagen climate summit next month. A falling dollar and gyrating commodity prices, with no idea where those prices will go next.

Democratic liberals are talking about an income tax surcharge to pay for any commitment in Afghanistan. Card check, to expand unionization of the private economy, remains a priority. Domestic discretionary spending in fiscal 2010 is set to rise at 12.1%, with inflation near zero.

Nurturing a fragile economic recovery into a durable expansion requires policies that restore public confidence and reassure investors, risk-takers and employers. The Democratic agenda is doing precisely the opposite, which is how you get subpar growth and fewer new jobs.

How could I not agree? However, intellectual honesty compels me to observe that to some degree the difference between left and right on economic policy comes down to this: Democrats believe that the economy can only recover if workers and consumers gain confidence (so that they spend money to create aggregate demand), and Republicans believe that the confidence of executives, directors, and investors is essential to unleash new investment and capacity expansion (which is necessary to capitalize on aggregate demand). Certainly both are necessary to restart an economy that has been sucking wind for two years. Economic stimulus to generate aggregate demand would be a lot more effective if there were not nearly so much uncertainty in law, regulation, and tax. The "progressive agenda" has sabotaged the stimulus, sad to say, and the economy will continue to move slowly until the government relieves the pressure on the people who actually make business decisions.
(10) Comments

Parody at internet speed is almost scary.

(5) Comments

We are prosecuting three Navy Seals for giving a terrorist a bloody lip. OK, there might also have been some obstruction of justice in there somewhere, but the underlying charge is so obviously asinine you have to wonder whether you would not have done the same thing.

Of course, the real problem is that the criminalization of military action will make it much harder to attract top people to the armed services, and that will work to the advantage of every country in the world that (i) has a small military, or (ii) does not have rule of law. Which is every country in the world except the United States and Israel.

Seems like a bad policy to me.

(9) Comments

Ezra Klein is, I think, substantially right in this (emphasis added):

Matt Yglesias and Kevin Drum are chewing over the hefty bipartisan support Bush got for his various domestic initiatives. The roll call is impressive: No Child Left Behind, the 2001 tax cut, the post-9/11 war resolution, Sarbanes-Oxley, McCain-Feingold, the Iraq war resolution, the 2003 tax cut, the Medicare prescription drug bill and the bankruptcy bill.

To make a bit of a heretical point, most of those cases prove that Bush's domestic agenda was a capitulation to liberalism, not that Democrats were spineless wimps. NCLB and the Medicare prescription drug bill were both longtime Democratic ideas. The problem with NCLB was implementation, and while the problem with Medicare Part D was that its design was a giveaway to drug companies, it was also hundreds and hundreds of billions funneled towards the largest expansions of Medicare since the program's creation. Health-care reform, in particular, would likely be impossible if the prescription drug benefit hadn't been accomplished. There'd be no way to add that money to the bottom line of the bill and pay for everything. Democrats owe Bush a debt of gratitude for tossing that onto the deficit.

Sarbanes-Oxley and McCain-Feingold were, again, bills doing basically progressive things. As I understand it, Bush didn't actually support either bill, but he decided against actually vetoing them. On some level, they represented the administration submitting to Congress and pubic opinion.

The war stuff is, well, the war stuff. Liberalism may have trumped conservatism in the Bush era, but neoconservatism was clearly dominant over both. The tax cuts were free money, and the bankruptcy bill was indefensible. But on the whole, Bush's domestic record is more a tale of co-opting liberal ideas and adding money for corporations than it is a tale of achieving longtime conservative ends.

By contrast, Barack Obama really is pursuing longtime progressive agenda items. There's no analogue to welfare reform on his docket. The administration's grim determination to leverage their uncommonly large majority to achieve things like health-care reform and cap-and-trade is, I think, somewhat underappreciated. The fact that they're not dogmatically liberal in the details can distract from the aggressive liberalism of their vision.

I'll up Ezra's heretical ante and say this: The Bush administration (including the mostly Republican Congress during that era) did more to harm business and entrepeneurialism in America than any presidency since Nixon's at least. This is not to say that individual corporations did not benefit from one program or another under Bush (just as individual corporations have gotten billions out of Obama), but that Bush administration policies, particularly regarding the regulation of public companies and the effective conversion of generally accepted accounting principles into a criminal statute, were and remain very destructive to the economy as a whole.
(2) Comments

James Taranto riddles us this in his Facebook status:

How many climate scientists does it take to change a light bulb?

Answer here.
(4) Comments

Thought experiment: If a Republican administration fired an inspector general watchdog under dodgy circumstances, would the story be confined to the cranky end of the blogosphere?

CWCID: Glenn Reynolds.

(6) Comments

The WSJ's web site has an interactive map that shows the percentage of homes that are in a negative equity position, by state. If you believe that the best time to buy is when blood runs in the streets and you have courage and wherewithal, perhaps the map also points toward the next big profits in residential real estate. If, after all, you believe we are setting ourselves up for some whopping inflation, then now might be the right time to buy hard assets with other people's money.

Yeah, I know. That was a very anti-social thing to write. Sorry.

(3) Comments

Iowa's coach Kirk Ferentz assumes the position during Saturday's shut-out of the Minnesota Golden Gophers. The question is, what position?

CWCID

(10) Comments

AP profiles San Jose, California, kindergarten teacher Kinzi Blair to illustrate part of the debate about who should bear the costs of funding health care reform. Blair makes $46,000 per year, but has a "Cadillac" health plan, and her employer pays $11,000 per year of premiums. She has no deductible and a $10 co-pay, with extensive coverage.

So, it turns out that some regular people -- not just rich corporate tools -- have nice health plans, some of which would be potentially subject to new taxes under the House or Senate plans. Under the Senate plan, according to the AP piece, Blair's insurance company would be taxed 40% of the amount of her premium greater than $8,500, or about $1,000. Somehow, this is not construed as a tax on Blair (although it is highly likely that the tax on her benefits will cost her something directly in the long run), because otherwise that would be: a) a new tax on someone making less than $250,000 per year; and b) a new tax on a member of a key Democratic Party constituent, a teacher.

The article quotes a Democratic lawmaker regarding his take on the hoped for "gross-up" effect:

One of the arguments for the Cadillac tax is that companies would spend their money to pay higher wages instead of providing rich benefits. Or so the thinking goes.

"The notion that there will be a corresponding increase in wages? You walk into a teachers' lounge or a break room in a factory and say that, you get laughed out of there. Maybe they'd chase you out of there," says Rep. Joe Courtney, D-Conn.

Courtney quickly scrambles back on the bus with a quote that would make Willie Sutton proud ("Why do you rob banks?" "Because that's where the money is."):

The House bill includes a 5.4 percent tax on individuals making more than $500,000 and families making more than $1 million. Courtney says that's the fair way to pay for reform.

"This is a slice of American society that has gotten a very good ride over the past 10 years," Courtney said.

I'm going to go out on a limb here and speculate and say that there will not be anywhere near enough $1 million income families to come close to covering even a fraction of the cost of the bills, and that the existing forecasts are static (don't take into consideration the tax planning reaction of such families) and way high. But, hey, why limit it to 5.4% on amounts over $1 million? Why not 6.9%? Why not 9.6%? Why not 20%? To paraphrase Napoleon regarding Vienna, if you're going to kill the goose, kill the goose, and don't worry about any foregone golden eggs. Willie Sutton wouldn't stop at a measly few percent of the cash on hand at a bank.

Permalink - - Main

(7) Comments

The New York Times is suddenly punctilious about publishing documents that might have been obtained illegally, at least if it might hurt the credibility of the climate alartmists. I'm going to go out on a limb and say that on this one Glenn Reynolds is speaking for the entire righty blogosphere: "You know, unless doing so would hurt national security, or something."

Sheesh. Clark Hoyt is going to have to turn some pretty cartwheels to explain this one away. Send him an email at public@nytimes.com and see if he has anything useful to say.

(3) Comments

...be happy you are not British. English feminists are complaining that this Christmas ad for the Marks & Spencer department store is demeaning to women.

As Ad Freak points out, the Brits simply have no idea how demeaning advertising can be...

(3) Comments

The TH Daughter and I went in to New York for hoofing around on a simply beautiful late autumn day. We arrived at Penn Station around 11, and by many stops walked to Dylan's Candy Bar at 60th and Third, where we spent a ridiculous amount of money on a tiny amount of candy. Apparently color-coordinated M&Ms command unusually high gross margins.

From Dylan's we took a cab to the American Apparel store on E. Houston, then walked through SoHo to Chinatown where we took in the sights and partied down with fried dumplings and vegetable fried rice. I took a few pictures along the way. Run your cursor for short descriptions.

(4) Comments

John Hawkins: "About himself, the president speaks loudly. For America, he carries a small twig." -- Mark Steyn

(3) Comments

Glenn Reynolds links to this bit from Anthony Dick at the Corner about University of California students protesting cuts in subsidies. The spectacle of generally left-wing students demanding that more wealth be transferred up to them is as amusing -- or irritating, depending on your taste -- now as it always has been.

First and foremost, the protests are about privileged kids demanding subsidies from working people. The UC system will continue to be heavily subsidized by taxpayers, and the students who attend are among the most naturally gifted, with the highest future earning potential, in the country. This is especially true at the system's flagship schools of Berkeley and UCLA, where the protests have been most intense. Narcissism and self-absorption are the norm on college campuses, but it really is pushing the limits to throw such a tantrum at the idea that you will be getting a smaller amount of free money taken out of the paychecks of strapped taxpayers, most of whom could never dream of the advantages and opportunities you enjoy.

Commentary

Of course, it has always been thus, or at least has been since government decided to subsidize higher education with land grants first and then more direct aid, including subsidized student loans and grants for research from which the recipient universities would extract massive "overhead" charges. From a certain cramped point of view, all of these subsidies are transfers from working people to the privileged. This view is "cramped" because it misses the point. We subsidize higher education for essentially social reasons, including to raise the competence of the work force and to support scholarship that could not happen otherwise. That individuals reap a windfall from these subsidies in the form of higher salaries in the future (in the case of students) and professional advancement (in the case of professors) is, in principle, an unintended consequence of the subsidies, not the objective of them.

Unfortunately, we have lost track of this thinking in recent years. Support for universities has taken on the attributes of most pork-barrel spending, so we have money going for all sorts of things for which it is hard, if not impossible, to justify subsidies on any intellectually honest basis. Intercollegiate athletic programs come to mind (much as I enjoy them, I cannot come up with a good reason to subsidize them), and so probably do most professional schools.

Something else, however, has also changed. Higher education, especially elite higher education, drives far more incremental earnings today than it did when we started subsidizing universities in a big way. Rightly or wrongly, a degree from a top school is perceived as the key to the good life. In effect, the unintended benefits of subsidies that flow to students have become far more valuable than they once were. It should not surprise us, therefore, that the recipients of those subsidies are ever more dogged in their defense of them, and that their demands for more, or even the preservation of the status quo, smell so self-interested.

If the value of an elite higher education continues to increase faster than the value of the "average" education, big subsidies for elite universities will increasingly offend norms of distributive justice on both left and right. The academic left will respond as it always does, expiating its guilt by proposing different massive subsidies for the "poor," by which it means a huge proportion of the population, and the right will increasingly attack the subsidies themselves. Both responses dodge the real need to explore anew the social purpose for subsidies for higher education.
(34) Comments

I walked from 42nd and Third to Penn Station this morning, and took a couple of pictures along the way. Bryant Park:

I used this camera, only orange.

(0) Comments

I walked across the campus from the Dinky station this afternoon, and snapped a few pics that some of you, at least, might enjoy.

(7) Comments

Parody this may be, but if it has not actually happened already it will before the health care "reform" bill gets passed...

(1) Comments

Iraqi jihadis really know how to piss off the cheese heads.

(1) Comments

Easily made, easily broken.

CWCID: Glenn Reynolds.

(5) Comments

The "Climate Skeptics Party" in Australia has launched a new television campaign that is bound to stir things up down under:

More along the same lines here.

No news on the sources of funding. Regardless, these ads will irritate all the right people.

Meanwhile, Der Spiegel -- a publication heretofore not known for being Big Oil's mouthpiece -- reports that climate scientists are "baffled" -- its word, not mine -- by the recent flattening in global average temperature (emphasis added):

The planet's temperature curve rose sharply for almost 30 years, as global temperatures increased by an average of 0.7 degrees Celsius (1.25 degrees Fahrenheit) from the 1970s to the late 1990s. "At present, however, the warming is taking a break," confirms meteorologist Mojib Latif of the Leibniz Institute of Marine Sciences in the northern German city of Kiel. Latif, one of Germany's best-known climatologists, says that the temperature curve has reached a plateau. "There can be no argument about that," he says. "We have to face that fact."

Even though the temperature standstill probably has no effect on the long-term warming trend, it does raise doubts about the predictive value of climate models, and it is also a political issue. For months, climate change skeptics have been gloating over the findings on their Internet forums. This has prompted many a climatologist to treat the temperature data in public with a sense of shame, thereby damaging their own credibility.

"It cannot be denied that this is one of the hottest issues in the scientific community," says Jochem Marotzke, director of the Max Planck Institute for Meteorology in Hamburg. "We don't really know why this stagnation is taking place at this point."

Of course, all of the disaster scenarios that justify massive regulation of greenhouse gas depend from the various climate models. If the models do not work in the short run, is there so much as a shred of evidence that they are accurately predicting the climate decades from now?
(13) Comments

Word.

(1) Comments

Harry Reid's health care bill includes a dancing plethora of new taxes, forcing the Obama administration to consider the important distinctions between broken promises, predictions that happen not to come true, and bare-faced lies. Among them is a new federal tax on comestic surgery, not simply the products used therein but the surgeon's fees for the procedure itself. This report from Oppenheimer addresses the various questions around the tax, including its impact on various of the public companies in the field.

Naturally, I have several reactions to the proposed tax.

First, all you plastic surgeons who voted for Barack Obama: Bwahahahaha!

Seriously, you had to know when you voted for the dude that he would target the rate of return of any industry that does not serve an important social purpose according to your average Harvard professor. You thought that oil, electric power, banking, Wall Street, pharmaceuticals and medical devices were all special cases? Fool.

Second, there are a great many customers of plastic surgeons, past and future, in Harry Reid's home state of Nevada. Singling out aesthetic surgery for a special tax seems like a dangerous move for him, but maybe I'm wrong. Do women with breast implants or Botox treatments not vote?

We admit, we're looking forward to the "I have breast implants, and I vote" bumper stickers.

Oh, OK:



Third, this tax will have a significant disparate impact on women, who purchase a disproportionate share [UPDATE: approximately 90% in 2004] of the aesthetic surgery in this country. Or is it OK to tax those women, because they are PNQLU^*, dear? Perhaps the Democrats imagine that these women are Sarah Palin's base, so it will not hurt them to impose this tax. If so, they might do well to consider the many ads placed by aesthetic surgeons in Princeton's local "Town Topics" newspaper.

Fourth, what's the logic behind the policy? Aesthetic surgery is not covered by health insurance, so there cannot be "overutilization" expense that hits the federal health care budget. It is a luxury service, just like a gym membership, tickets to the World Series, an evening of gambling in Vegas, a fine dinner at a top restaurant, or a night at the opera. Other than sheer snobbery, why ought we tax aesthetic surgery to pay for health care any more than any other luxury service? What possible rationale could there be to tax aesthetic surgery (which, if anything, absorbs overhead that would otherwise burden "medically necessary" surgery that the government does pay for) and not these other luxury services?

In the end, the Democratic elite are using the excuse of health care reform to impose their own sense of aesthetics on American life. The proposed tax on aesthetic surgery is but one early example, quite obviously the mere tip of the iceberg, the camel's nose, and the slippery slope all rolled in to one. There is no rationale for the tax related to health care reform per se, only the desire to raise revenue at the expense of a class of people who are unlikely to raise much of a ruckus. Who, after all, will stand up and oppose the tax because they want their breasts enlarged (or, for that matter, reduced), their thighs re-shaped, or their tummy tucked? [UPDATE: Last year, a poll found that 48 percent of women "would be" interested in aesthetic surgery, and another 23 percent "might be." That's a pretty big block of voters, Senator Reid.]

MORE: CoulterLanche! Not had one of those before...

____________________________
*People Not Quite Like Us

(13) Comments

Watch this selection from Eric Holder's Senate testimony on the use of the civilian criminal justice system to try jihadis who kill Americans. Leaving the substantive arguments to Andy McCarthy, who has just been beating the hell out of them over at The Corner for days, how is it possible that Holder was not ready for the Miranda question?

Boggles my mind.

(36) Comments

In the "fool me once, shame on you, fool me twice, shame on me" department, the Maersk Alabama was not boarded by pirates:

Somali pirates attacked the Maersk Alabama on Wednesday for the second time in seven months and were thwarted by private guards on board the U.S.-flagged ship who fired off guns and a high-decibel noise device.

Oddly, there is not a consensus that the actions of the Maersk Alabama are a good thing:

Roger Middleton, a piracy expert at the London-based think tank Chatham House, said the international maritime community was still "solidly against" armed guards aboard vessels at sea, but that American ships have taken a different line than the rest of the international community.

"Shipping companies are still pretty much overwhelmingly opposed to the idea of armed guards," Middleton said. "Lots of private security companies employee people who don't have maritime experience. Also, there's the idea that it's the responsibility of states and navies to provide security. I would think it's a step backward if we start privatizing security of the shipping trade."

Isn't there an old saying about an ounce of prevention being worth a pound of cure, or something like that?

Permalink - - Main

(12) Comments

The deal proposed by the UN regarding nuclear fuel has been rejected by Iran:

Iran's foreign minister on Wednesday said his country would not export its enriched uranium for further processing, effectively rejecting the latest U.N. plan aimed at preventing Tehran from building nuclear weapons.

Instead Manochehr Mottaki said Iran would consider a nuclear swap inside Iran as an alternative plan.

The United Nations last month offered a deal to take 70 percent of Iran's low-enriched uranium to reduce its stockpile of material that could be enriched to a higher level, and possibly be used to make nuclear weapons.

That uranium would be returned about a year later as refined fuel rods, which would solve the impasse over its nuclear program. Fuel rods cannot be readily turned into weapons-grade material.

Mottaki also took a swipe at the U.S. Secretary of State:

"Diplomacy is not all or nothing. Mrs. Clinton's comments that Iran must accept only this proposal is not diplomatic."

Maybe the term "Smart Diplomacy" does not translate well into Farsi.

In other news, Peyton Manning is a good quarterback, LeBron James can really play basketball, and, late this afternoon, the sun will set in the west.

Permalink - - Main

(3) Comments

Lobbying as metaphor: An argument against the "public option" via pick-up basketball.

Not the single most politically correct video you are going to see this week -- or is it legitimate given the president's own use of basketball on the campaign trail? -- but the point is well-taken.

(1) Comments

...what does Tom Hayden know that we do not?

One man's dream is surely another's nightmare.

(7) Comments

Talk about your inconvenient factoids. How does anybody with two brain cells to rub together, even if he did go to Harvard, think that anywhere on the inside of the earth has a temperature of "several million degrees." And how did Conan not call him on it?

I suppose it is just as well that Gore did not win a Nobel Prize for science.

(26) Comments

The heavy travel continues apace so no promises here, but Edward Luttwak's most recent effort in Foreign Policy is worth your time. He suggests that if the United States wishes to retain its status as the indispensible power (an open question in the age of Obama), it needs to emulate the Byzantine Empire rather than the Roman. Specifically:

I've spent the past two decades poring over these texts to compile a study of Byzantine grand strategy. The United States would do well to heed the following seven lessons if it wishes to remain a great power:

I. Avoid war by every possible means, in all possible circumstances, but always act as if war might start at any time. Train intensively and be ready for battle at all times -- but do not be eager to fight. The highest purpose of combat readiness is to reduce the probability of having to fight.

II. Gather intelligence on the enemy and his mentality, and monitor his actions continuously. Efforts to do so by all possible means might not be very productive, but they are seldom wasted.

III. Campaign vigorously, both offensively and defensively, but avoid battles, especially large-scale battles, except in very favorable circumstances. Don't think like the Romans, who viewed persuasion as just an adjunct to force. Instead, employ force in the smallest possible doses to help persuade the persuadable and harm those not yet amenable to persuasion.

IV. Replace the battle of attrition and occupation of countries with maneuver warfare -- lightning strikes and offensive raids to disrupt enemies, followed by rapid withdrawals. The object is not to destroy your enemies, because they can become tomorrow's allies. A multiplicity of enemies can be less of a threat than just one, so long as they can be persuaded to attack one another.

V. Strive to end wars successfully by recruiting allies to change the balance of power. Diplomacy is even more important during war than peace. Reject, as the Byzantines did, the foolish aphorism that when the guns speak, diplomats fall silent. The most useful allies are those nearest to the enemy, for they know how best to fight his forces.

VI. Subversion is the cheapest path to victory. So cheap, in fact, as compared with the costs and risks of battle, that it must always be attempted, even with the most seemingly irreconcilable enemies. Remember: Even religious fanatics can be bribed, as the Byzantines were some of the first to discover, because zealots can be quite creative in inventing religious justifications for betraying their own cause ("since the ultimate victory of Islam is inevitable anyway …").

VII. When diplomacy and subversion are not enough and fighting is unavoidable, use methods and tactics that exploit enemy weaknesses, avoid consuming combat forces, and patiently whittle down the enemy's strength. This might require much time. But there is no urgency because as soon as one enemy is no more, another will surely take his place. All is constantly changing as rulers and nations rise and fall. Only the empire is eternal -- if, that is, it does not exhaust itself.

Commentary

Recognizing that the Bush administation did not follow this useful advice, the "progressives" now in charge of our foreign policy have evidenced no stomach for the hardball covert ops necessary to go Byzantine on our rivals and enemies. That points to a paradox: If you do not like overt war, then you need to have the stomach for shadow war. If American hawks have been too quick to wage the former, American liberals (since the Carter years) have done everything they can to block, defund, and undermine the latter. This is curious, since nothing is more likely to lead to ill-advised overt war than the inability to win a shadow war. The liberal desire to substitute "diplomacy" for both -- as if diplomacy were its own discipline that operates in a vacuum -- will lead to nothing but the weakening of America.
(26) Comments

It is at least hideous that Christmas ads are already running on television, but this one stands out as the best I've seen so far:

How do you not like that ad?

(5) Comments

Am I the only one who just noticed the ads for the Reebok "EasyTone" shoe, which allegedly produce "better legs and a better butt with every step"? These are running on my health club TV right now.

I did not know that Reebok had written off the feminist market.

(7) Comments

Paul Kedrosky built up a nice chart of the ratio of unemployed people per job listing, with the sucking chest wound that is Detroit on the right side of the graph. Kedrosky headlined the Detroit number in his post, but take a look at the robust employment market in our nation's capital. Relevant TigerHawk poll question below.

Looking at the ratios of unemployed to job listings in each of Detroit or Washington, which number concerns you more?
	Detroit's: The Motor City was once the heartbeat of America, and its collapse is a national tragedy.
	Washington's: Every job you add in Washington kills at least one other somewhere else in America.
Free polls from Pollhost.com

Release the hounds.

(9) Comments

If you are an investor, director, or employee, beware CEOs who "win" personal business awards.

Compensation, status, and press coverage of managers in the United States follow a highly skewed distribution: a small number of “superstars” enjoy the bulk of the rewards. We evaluate the impact of CEOs achieving superstar status on the performance of their firms, using prestigious business awards to measure shocks to CEO status. We find that award-winning CEOs subsequently underperform, both relative to their prior performance and relative to a matched sample of non-winning CEOs.

Ego is expensive. Few successful leaders have any shortage of ego, but you need to pay attention when it starts to get out of hand. CEOs who aggrandize themselves are rarely helping anybody other than themselves.

CEOs who seek "awards" almost always love talking to the press. While that can make sense if your company sells a consumer products, there is rarely a good reason to speak to the press if your customers are other businesses or professionals or otherwise uninterested in you personally. There are, however, plenty of reasons not to talk to the press, including that the media loves nothing more than to tear down its own creations and politically ambitious prosecutors will gain more if they can pin a business crime on an executive with a public image to uphold. Neither is good for the CEO's company. A CEO should therefore spend as little time on television or talking to the general media as humanly possible.
(4) Comments