Random Thoughts

Via Andrew Sullivan comes an article by Rich Moran that provides an elegant, brutal critique on the direction of the conservative movement:

Classic conservative principles are timeless; immutable tenets that have inspired great changes in government over the last 400 years and spoken passionately and plainly to the needs and hopes of ordinary people. Since the end of World War II, those classical principles have informed a  devastating critique of the welfare state, presenting a reasoned and logical alternative to statism and dependency. Conservatism has stood for human liberty based on the fundamental idea of natural law; that from his first breath, man is born free.

But conservatism has gone off the rails, becoming in some respects a parody of itself. A philosophy that is all about honoring and conserving tradition while allowing for change  that buttresses and supports important aspects of the past, has been hijacked by ideologues who brook no deviation from a dogma that limits rather than expands human freedom. Conservatism has become loud, obnoxious, closed-minded, and puerile, while its classical tradition of tolerance and hard-headed rationalism has been abandoned in favor of emotional jags and a vicious parochialism that eschews debate for “litmus tests” on ideological purity.

He concludes by saying:

Until conservatives can practice some painful introspection, looking with a self-critical eye at the reasons for the debacles of 2006 and 2008, most in the movement will continue to delude themselves that simply reaffirming conservative love of small government, low taxes, and less regulation will be enough to convince a majority of Americans that they recognize their shortcomings and have changed their tune. There must be a reckoning with those who violate the very nature of conservatism by obstinately adhering to exclusionary, anti-intellectual precepts that have thrown classical conservatism over in favor of ranting, ideological tantrums.

The anti-elite, anti-intellectualism displayed by broad swaths of the conservative movement during this last election worry me the most.  The idea that the majority of this country’s major problems can be solved by the application of a little common sense may play well on talk radio, but it is blatantly false and needs to be exposed as such.  Health care reform is hard.  Fixing our economy is hard.  Properly designing a program that will lead to true energy independence while not tanking our economy is hard.

Republicans pull together to recover their party.

All of these problems cry for the attention of experts, individuals who are smarter than you or I and who can properly design the innovative solutions these problems require.  Foreign relations similarly demands the attention of experts who can properly understand the countries we are dealing with so as to conduct negotiations in a manner that is to our advantage.  Basic government services — from putting criminals in jail to cleaning up after natural disasters — require competence much more than the application of a particular ideology.

These individuals are, or at least should be, elite.  They should be the best of the best.  For the conservative movement to turn its back on the people with ideas, to actively work to alienate such individuals and throw scorn upon those who devote hard work to solving hard problems, is rightly at the core of recent electoral failures.

The day after I wrote my post below on nationalizing the banks, I opened the Wall Street Journal to discover an op-ed piece by William M. Isaac, former chairman of the FDIC.  Isaac starts:

People who should know better have been speculating publicly that the government might need to nationalize our largest banks. This irresponsible chatter is causing tremendous turmoil in financial markets. The Obama administration needs to make clear immediately that nationalization — government seizing control of ownership and operations of a company — is not a viable option.

Unlike the talking heads, I have actually nationalized a large bank. When I headed the Federal Deposit Insurance Corporation (FDIC) during the banking crisis of the 1980s, the FDIC recapitalized and took control of Continental Illinois Bank, which was then the country’s seventh largest bank.

Quite frankly, I’m not sure what to make of his piece.  For the former chairman of the FDIC, the agency that has so much experience in bank nationalization, to come out against this solution carries much weight.  In the very least, it shows that my self righteous final paragraph was a bit over the top.

When it comes to bank nationalization, though, Krugman and his friends on the left aren’t alone in calling for such a step.  The Wall Street Journal, in the process of thrashing the Obama administration, arrives at the same conclusion as Krugman:

Amid the continuing gloom, the message that investors hear when all five regulators line up as a phalanx is: Uh, oh, things must be worse than we thought. All the more so when those same regulators still aren’t offering any specific plans for moving ahead, much less any vision for where they want the financial system to end up.

One result of this uncertainty is that the Obama team has failed to stem a damaging public debate over “nationalization.” We think the debate is mostly beside the point, or should be. Some financial institutions — perhaps many — will have too little capital to absorb their current and future losses, and will end up being taken over by the Federal Deposit Insurance Corp. The FDIC has been doing this for decades, and in fact is now doing it nearly every week with smaller banks.

The agency protects insured depositors and then sells or otherwise disposes of the bank’s assets. This is precisely the kind of failing-bank resolution that we scored the Bush Treasury for not being prepared for, going back more than a year ago. We guess this is a form of “nationalization,” but it’s hardly new and it need not and should not require permanent government ownership.

The Economist has similarly lined up in favor of bank nationalization, not as the centerpiece of any policy, but as the natural outcome of a balanced approach to dealing with the banks.  The Economist is similarly hard on the Obama administration, and is especially critical of Geithner’s vague Feb 10 speech:

More worrying still is the chance that Mr Geithner’s vagueness comes from doubt about what to do, a reluctance to take tough decisions, and a timidity about asking Congress for enough cash. That is an alarming prospect. “Banksters” may be loathed everywhere, but more money will surely be needed to clean up America’s banks and administer the financial fix the economy needs. That, as this newspaper has argued before, means both some form of “bad bank” for toxic loans (with temporary nationalisation part of that cleansing process, if necessary) and guarantees to cover catastrophic losses in the “good” banks that remain. Mr Obama’s team must recognise this or they, like their predecessors, will come to be seen as part of the problem, not the solution.

When I was on a ship during my third class cadet summer at the Coast Guard Academy (the summer before my sophomore year), we pulled into New Orleans.  This is the New Orleans I remember:

An infant and at least four other people were shot Tuesday along a parade route packed with Mardi Gras revelers, police said. Two suspects were in custody and the victims were recovering.

…

Beau Beals, 45, said he was outside a house party on St. Charles Avenue when the shooting erupted. He said and other partiers tossed children over a metal fence to get them to safety, but others kept waiting for beads and other trinkets being tossed from the floats as if nothing had happened.

”They had an ambulance out here picking the guy up off the street and people didn’t stop vying for throws,” Beals said.

 No one was shot was I was in New Orleans, but the drunken revelry was unlike anything I have ever seen anywhere else.  We had guys from the ship who would wake up at 10 a.m. and head out drinking, come back around 3 or 4 p.m. and take a brief nap, before heading out at 8 p.m. to get drunk again.

Paul Krugman joins the chorus of, well, pretty everyone who claimed to know something about economics before this colossal mess came about:

What Alan Greenspan, the former Federal Reserve chairman — and a staunch defender of free markets — actually said was, “It may be necessary to temporarily nationalize some banks in order to facilitate a swift and orderly restructuring.” I agree.

The case for nationalization rests on three observations.

First, some major banks are dangerously close to the edge — in fact, they would have failed already if investors didn’t expect the government to rescue them if necessary.

Second, banks must be rescued. The collapse of Lehman Brothers almost destroyed the world financial system, and we can’t risk letting much bigger institutions like Citigroup or Bank of America implode.

Third, while banks must be rescued, the U.S. government can’t afford, fiscally or politically, to bestow huge gifts on bank shareholders.

But here’s the thing: the funds needed to bring these banks fully back to life would greatly exceed what they’re currently worth. Citi and BofA have a combined market value of less than $30 billion… And if it’s basically putting up all the money, the government should get ownership in return.

Still, isn’t nationalization un-American? No, it’s as American as apple pie.

Lately the Federal Deposit Insurance Corporation has been seizing banks it deems insolvent at the rate of about two a week. When the F.D.I.C. seizes a bank, it takes over the bank’s bad assets, pays off some of its debt, and resells the cleaned-up institution to private investors. And that’s exactly what advocates of temporary nationalization want to see happen, not just to the small banks the F.D.I.C. has been seizing, but to major banks that are similarly insolvent.

…

Why not just go ahead and nationalize? Remember, the longer we live with zombie banks, the harder it will be to end the economic crisis.

The thing with finance is that there are experts. The trouble is that once something like this becomes major news, everyone and their mother develops an opinion.  As the din rises ever louder it becomes difficult to differentiate between those worth listening to and those simply seeking further their own pre-crash political agenda.

This arrived in my email inbox.  It’s not terribly PC to laugh at such situations, but it’s quite fun.  If I’m violating somebody’s copyright by posting this, please let me know so I can take it down.

Fun With Driving

Hugo Chavez has been busily destroying his country’s economy and infrastructure like Godzilla rampaging through Tokyo.  The voters of Venezuela recently thanked him by removing presidential term limits, opening the gates for him to run for a third term and remain president indefinitely.  Chavez’s policies have graced the country with an inflation rate of 36 percent, and the country’s oil and gas production has fallen since Chavez nationalized the entire industry:

PdVSA’s [the state oil monopoly] debt has gone from two billion dollars ten years ago to $20 billion, its production has fallen from 3.2 to 2.4 million barrels a day, and the refineries are running into operational problems

Which raises a question for the people of Venezuela:  Are you living in abject poverty because you deserve it?  Of course, that’s a horrible thing to say and I don’t believe it at all, but when the citizens of a country vote in a manner so contrary to their own financial well being it’s easy to throw up your hands in despair.

Xin Lu, over at Wisebread, does a good job explaning why the “Buy American” clause in the stimulus bill is such a poor idea:

So the logic is that if the stimulus spent as much as possible on American products then it would narrow the trade deficit and keep more jobs in America.  However, considering that the public works portion of the stimulus bill is only about $73 billion, I doubt it would make a dent in the trade deficit.   Instead, it is fueling a lot of anger in many trade partners for little gain.

The only people who think this is a good idea are the labor unions, who are working overtime to exact their pound of flesh in exchange for helping the Democrats get elected.  The CEO of Caterpillar, which as an American manufacturing firm is one of the potential benficiaries of this clause, came out against the Buy American provision in an Op-Ed piece published in the Chicago Tribune:

Caterpillar would like to sell U.S.-made products for infrastructure projects at home and abroad. But if the U.S. sends the message that regardless of value, countries should only buy locally produced products, Cat’s exports, as well as the U.S. jobs they support, will be hurt. In some of our Illinois factories, as much as 70 percent of what we make is sold overseas.

Today’s New York Times carries a story of graft and corruption among U. S. officers charged with overseeing projects and distributing money in the early days of the Iraq reconstruction. For those who aren’t familiar, the monetary distribution at that time was insane. From fellow government workers I’ve heard stores of forklift-ready pallets of shrink-wrapped money being loaded into cargo planes. Contractors and locals in Iraq were paid with bundles of $100 bills by folks who would walk around with their pockets bulging with cash.

A soldier holds cash ready for distribution.

Now we hear that some of the senior officers tasks with distributing these funds may have been on the take. Nobody should be surprised by this. Beyond the “in any group you’ll have a few bad apples” argument, it’s easy to see how this could happen. The temptation in any situation involving large amounts of cash is, of course, enormous. However, the real condition that predicates this is that most of the money was probably wasted in the first place – paid out in good faith for supplies or services that were never delivered. I remember a quote from someone from the Inspector General’s office, who was responded to a local construction manager’s apologies for the poor condition of a work site. “At least there’s something here,” he responded.

In this situation, it’s easy to see how those distributing the money could be tempted: “If all this money is being flushed down the drain straight into people’s pockets, why shouldn’t I get my fair share?” It’s one thing to steal large quantities of money that are going to a worthy cause, but when the money is being wasted anyways it’s much easier to steal.

If the allegations are true, I hope that the two officers in question will be recalled to active duty and court-martialed. Unfortunately, the military is strangely reluctant to enforce discipline in the ranks for non-violent crimes such as these. Court-martialing military members is an expensive process, and it’s often easier to avoid the hassle and let the Department of Justice handle the headache. A good example of this is a former Coast Guard warrant officer who was convicted of dumping oily waste off a Coast Guard cutter into the Honolulu harbor. This is exactly the sort of actions the Coast Guard crucifies civilian mariners for, but in this case the service declined to assert jurisdiction and court-martial the member. Instead, he was handed over to federal authorities and given a slap on the wrist.

Why anyone thinks electing judges is a good idea is simply beyond me.  I understand the need for accountability, but the populace has a tough enough time understanding general political issues well enough to elect legislators — the task of understanding nuanced legal issues is often too much.  Besides, judges are supposed to act as a check against the other branches of government — enforcing the law even when it’s the exact opposite of what people are demanding.

Further complicating the problem is that being elected is messy business.  It requires money, and that money has to come from somewhere.  Witness the case of Don Blankenship, who inserted himself into a judicial re-election campaign when his company’s profits were on the line.

In 2004, he spent $3 million on tough advertisements attacking a justice of the State Supreme Court who was seeking re-election.

…

Brent D. Benjamin [the judge Blankenship supported] won that election and went on to join the 3-to-2 majority that threw out a $50 million jury verdict against Mr. Blankenship’s company, Massey Energy.

As an added bonus it turns out Blankenship is a regular sleazeball, who turned to misleading dirty advertising to defeat Justice McGraw’s re-election campaign:

Some of the advertisements said the justice had agreed to free a reprehensible sex offender.

…

Mr. Blankenship’s advertisements, which said Justice McGraw had released a pedophile, were rough and arguably misleading. They concerned a youth who had been sexually abused from the age of 7 by two adult family members and a teacher before going on, at the age of 14, to abuse a younger half-brother. The youth was released on probation soon after he turned 18.

…

Mr. Blankenship cheerfully conceded that his real objection was to Justice McGraw’s rulings against corporate defendants. “Being the street fighter that I am,” he said, he had instructed his aides to find a decision that would enrage the public.

Have you visited the site Stuff White People Like.com?  If you haven’t you should.  Right now.

I’m only half white but I grew up in Northern California, which is the gooey center for the type of urban, liberal, economically comfortable, and “progressive” white person this site derives so much humor from.  One of my favorite entries is on the joy of being offended.