jonathan lundell
Joe the Plumber is headed to Israel, to “cover the Gaza conflict from the Israelis’ point of view”. Is he worried about the danger? Not a bit of it.
“Being a Christian, I’m pretty well protected by God, I believe.”
Being a Jew, of course, doesn’t cut it, and Muslims are right out. The solution is obvious, though.
Mark Pittman at Bloomberg.
Paulson Bailout Didn’t Give Taxpayers Buffett’s Terms
Henry Paulson may be the most powerful manager of money in the world and he still couldn’t do for taxpayers with the $700 billion bailout of American banks what Warren Buffett did for his shareholders in investing in Goldman Sachs Group Inc.
The Treasury secretary has made 174 purchases of banks’ preferred shares that include certificates to buy stock at a later date. He invested $10 billion in Goldman Sachs in October, twice as much as Buffett did the month before, yet gained warrants worth one-fourth as much as the billionaire, according to data compiled by Bloomberg. The Goldman Sachs terms were repeated in most of the other bank bailouts.
Paulson’s warrant deals may give U.S. taxpayers, who are funding the bailouts, less profit from any recovery in financial stocks than shareholders such as Goldman Sachs Chief Executive Officer Lloyd Blankfein and Saudi Arabian Prince Alwaleed bin Talal, owner of 4 percent of Citigroup Inc., said Simon Johnson, former chief economist for the International Monetary Fund.
The transactions are “just egregious,” said Johnson, a fellow at the Peterson Institute for International Economics in Washington. “You want to do it the way Warren does it.”
Paulson’s decisions mark the first time in the nation’s 236- year history that the U.S. government has had to prop up the financial system by purchasing shares in institutions from Goldman Sachs, the most profitable Wall Street firm last year, to Saigon National Bank, a Westminster, California, lender with a market value of $3.8 million.
…
via Barry Ritholtz
Matthew Yglesias wants to lower the threshold (that is, make it available to more families) for the Child Tax Credit, and adduces this evidence in support of the need to do so.
We’re #1!
No good reason, says Felix Salmon.
As SAR notes, the "longer and deeper recession" meme is "becoming the popular view" — it’s increasingly difficult to find people who really think we’ll bounce back in the second half of this year, and economists generally are much more bearish now than they were a couple of months ago.
So why is the stock market up 20% since then?
My feeling, mainstream as it may be, is that stocks are drifting upwards in blissful ignorance of reality, much as they did for nearly all of 2007, even after the credit crisis first hit. The panic sellers and the people desperately needing liquidity have left, volumes have fallen (as they always do around the holidays, no news there), and volatility has decreased. And so both value and momentum players are feeling increasingly comfortable rotating back in to the market.
…
The lesson of the past two years is that the stock market is a lagging, not a leading, indicator. I have no faith in this rally whatsoever; I hope that I’m wrong, but I just don’t see the current stock market reflecting an economy which is hugely reliant on retail spending and where holiday-season sales were the weakest in four decades. It’s always calmest before the storm, and I fear another gale might be brewing.
There was a fine interview with Amos Oz on NPR this morning. Give it a listen.
The many Israelis who have been watching the conflict in Gaza include Amos Oz. The Israeli novelist is known as a dove. He co-founded a group called “Peace Now” in 1978. Yet, he tells Steve Inskeep that he initially supported Israel’s air strikes on Gaza.
Mr. OZ: In the long term, the only thing that will work for Israel and for the Palestinians is the unavoidable one and only political solution, which is a two-state solution. The Palestinians are in Palestine for the same reason for which the Norwegians are in Norway. It is their homeland, and they are not going away. The Israelis are in Israel for exactly the same reason, and they’re not going anywhere either. They cannot become one happy family, because they are not one, and because they are not happy, and because they are not even a family. They are two unhappy families. Now the good news — and there are some good news from the Middle East, although you people only get the bad news all the time. The good news is that the majority of the Israeli Jews and the majority of the Palestinian Arabs know now in their heart of hearts that in the end of the day there will be a partition and a two state solution.
… We know the way out. We don’t like this way out. It’s like a patient who has to undergo a painful surgery, an amputation. And dividing the country into two nation states is going to be like an amputation, both for the Israelis and for the Palestinians. But it has to be done, and it’s time for bold leadership on both sides to carry out this solution and to do what people know has to be done.
While you’re at it, this piece is worthwhile as well.
The fighting in Gaza has killed more than 600 Palestinians — many of them civilians. Col. Jim Hellis is chairman of the U.S. Army War College’s department of national security and strategy. He talks with Ari Shapiro about how the U.S. military factors in civilian casualties when assessing war strategy. Hellis says it’s a balance among legal, ethical and political concerns.
Andrew Brown describes research into conflicts over “sacred values”, published last year in the Proceedings of the NAS.
Our experiments tested the general hypothesis that, when reasoning about sacred values, people would not apply instrumental (cost–benefit) calculations but would instead apply deontological (moral) rules or intuitions.
When land is sacred and peace profane
… In these experiments, nearly half the settlers considered land on the Occupied Territories a sacred value, while a little more than half the Palestinians considered sovereignty over Jerusalem in the same light. More than four-fifths of them thought the right of return was a sacred value, too, which makes any rationalist observer despair.
The first interesting result was that offering money or material goods in exchange for sacred ones did not make the sacred goods less valuable but more. Expressions of anger and disgust and of the willingness to use violence actually rose among moral absolutists when a deal involving giving up some sacred value was sweetened with material incitements, such as suggesting to Israeli settlers that they give up the West Bank to a Palestinian in return for an American subsidy to Israel of $1bn a year for 100 years.
So far so hideously depressing. But the second, more optimistic, result was that the absolutists who rejected with contumely the offer of profane money (or peace) for sacred land would accept deals that involved their enemies giving up things that they considered sacred. The paper cites both Israeli and Hamas leaders saying that they could make peace if only the other side would apologise for 1948, or recognise formally Israel’s right to exist. Demanding this kind of wholly intangible mutual surrender of pride makes no sense on a utilitarian calculus, and yet it may be the only thing to unlock the situation. …
Not just Gaza.
All nationalists have the power of not seeing resemblances between similar sets of facts.
A British Tory will defend self-determination in Europe and oppose it in India with no feeling of inconsistency. Actions are held to be good or bad, not on their own merits, but according to who does them, and there is almost no kind of outrage — torture, the use of hostages, forced labour, mass deportations, imprisonment without trial, forgery, assassination, the bombing of civilians — which does not change its moral colour when it is committed by ‘our’ side … The nationalist not only does not disapprove of atrocities committed by his own side, but he has a remarkable capacity for not even hearing about them.
— George Orwell
via M.J. Rosenberg
Johns Yoo and Bolton caution that we need to limit executive authority. After January 20, anyway.
Op-Ed Contributors – Restore the Senate’s Treaty Power
The framers of the Constitution designed the treaty process with a bias against “entangling alliances,” as Thomas Jefferson described them in his first inaugural address. They designated the Senate as the body responsible to protect the interests of the states from being bargained away by the president in deals with foreign nations. The framers required a supermajority to ensure that treaties would reflect a broad consensus and careful, mature decision-making.
OK, a ten-best list ought to be eccentric. After all, how many times do we need to be pointed at Casablanca or Kane? But…Groundhog Day?
It’s Top Ten time again, and like everyone else I have a list, in my case a list of the 10 best American movies ever. Here it is, with brief descriptions and no justifications. Only the first two films are in order. The others are all tied for third.
IOZ.
One should be clear that this sociopathic indifference to (or even celebration over) the deaths of Palestinian civilians isn’t representative of all supporters of the Israeli attack on Gaza. It’s unfair to use the Goldfarb/Peretz pathology to impugn all supporters of the Israeli attack. It’s certainly possible to support the Israeli offensive despite the deaths of these civilians, to truly lament the suffering of innocent Palestinians but still find the war, on balance, to be justifiable.
Dear Glenn,
No. It isn’t.
Shalom,
IOZ
Dean Baker. The piece now has an addendum that explains Dean’s argument in a little more detail. Of course, this all depends on whether you “own large amounts of stock” or are “the rest of us”.
Wall Street’s Loss Can Be Our Gain
The lead article in the New Year’s Day edition of the Washington Post bemoaned the loss of $6.9 trillion in value in U.S. stock market last year. While those who own large amounts of stock have reason to shed tears, this may end being good news for the rest of us.
The loss of stock wealth means that stockholders have less claim to value of the country’s output. The U.S. economy can produce just as much in 2009 as it did in 2008 (in fact somewhat more, because of labor force and productivity growth). If stockholders can demand less because of the reduced value of their stock, then this leaves more for the rest of us. …
Matt Yglesias a couple of days ago. It’s worth repeating.
Michael Cohen writes:
If Israel dismantled all its settlements tomorrow, Hamas would not turn around and renounce violence; but if Hamas were to recognize Israel the path to reconciliation would be far easier to achieve.
This is totally true. But consider this proposition:
If Hamas were to recognize Israel tomorrow tomorrow, Israel would not turn around and renounce settlements; but if Israel were to dismantle all settlements the path to reconciliation would be far easier to achieve.
That’s also true. But by arbitrarily shifting the standard, so that Israeli actions are judged according to whether or not they would magically cause the other side to become reasonable, whereas Palestinians are merely asked whether or not making unilateral concessions would in some sense make reconciliation easier to achieve, Cohen has managed to put a heavily pro-Israel spin on the banal observation that both sides could do more to improve the situation but that achieving real peace requires steps on both sides.
Meanwhile, of course, there’s still such a thing as ethics and so forth. Vaguely pointing rockets at civilian areas and hoping they kill as many people as possible is wrong, completely independently of whether or not Israel is also doing things that are wrong. I think that’s a point that’s pretty well-appreciated in the American conversation on this. But by the same token, Israeli actions that are wrong are wrong independent of whether or not Hamas is launching rockets.
The Folks Who Told You the Economy Is Just Fine are Worried that the World Will Get Less Crowded
The last time I went to the beach it was very crowded. The Washington Post wants us to be concerned that it might be less crowded in 20 or 30 years. The problem is falling birth rates and declining populations.
That’s right the same people who told us a few months ago that the economy was just fine are now telling us that we should be worried about a planet with fewer people consuming less resources. Yes, this is yet another piece in the Post’s jihad against Social Security and Medicare.
A smaller population should make us richer, other things equal, since there will be less demand for beach space and other natural resources. The declining rate of workers to retirees can easily be met by productivity growth (a concept with which Post writers seem unfamiliar) and by losing a few jobs on the midnight shift at 7-11s.
The column warns us that China may grow old before its grows rich. At its recent growth rates, output per worker in China will be almost 6 times higher in twenty years as it is today. Suppose its ratio of retirees to workers doubles over this period. Then means that supporting retirees at current living standards would impose a burden on workers that is one-third as large (relative to their income) as the burden imposed at present. That should make everyone really scared.
—Dean Baker
NY TImes via Barry Rithholtz.
The cover from the current issue of High Country News.
Or are they just realists? Any more likely than anyone else to be right about 2009? Beats me.
New York Magazine again.
Nouriel Roubini
NYU business professor; chairman of RGE MonitorTRACK RECORD
Predicted this year’s crisis in 2006, pointing to a housing bust, oil shocks, and interest-rate increases.CURRENT PREDICTION
“It’s becoming a global recession. I expect it to be the worst U.S. recession of the last 50 years. I expect a cumulative fall in output from the peak of 4 percent and the unemployment rate going all the way to 9 percent.”
2008 Investment Guides Are HILARIOUS the New York Magazine. Of course, these folks are now giving advice for 2009—and being paid for it. A representative sample:
Jon Birger, senior writer, Fortune’s Investors Guide 2008
What he said then: “Question: What do you call it when an $8 billion asset write-down translates into a $30 billion loss in market cap? Answer: an overreaction … Smart investors should buy [Merrill Lynch] stock before everyone else comes to their senses.”
What we know now: Merrill agreed to sell itself Bank of America to avoid a Lehman-like flameout in a deal closing in January. Meanwhile, Merrill’s shares plummeted 77 percent.
via Barry Ritholtz
It appears that Blagojevich has decide to appoint one Roland Burris, 71, former Illinois AG, to Obama’s vacated Senate seat. Burris might even be a good guy, but the Senate Democrats are saying they’re having no part of it.
Here’s a suggestion, via Josh Marshall, that the Senate may have no say in the matter. Interesting.
Maybe The Senate Has No Choice?
I said below that the Senate had full power to seat or not to seat any Blago appointee. And the senate does have extensive power to judge elections and qualifications. But Jeff Greenfield points out that the senate may not actually have that power with regards to an appointment…
Hey, Josh—re the Senate’s power.
I think you’re wrong about saying the Senate has full power not to seat the Gov’s pick. In Powell vs McCormick, a 1969 case involving Adam Clayton Powell, the Supreme Court said, 7–2, that a house of Congress does NOT have such power-they can judge “qualifications” in the Constitutional sense (age, citizenship, etc). And they can judge elections, but say nothing about appointments. (Nate Silver did a great piece on this awhile back).
They can probably EXPEL a member as they see fit—though the Court’s decision does not make that clear—but on what grounds? Just because they don’t like the guy who picked him?
PS—just know these are tentative notions…I’m sure all sorts of folks are trying to tease out this one…(don’t know if every Senate official and/or academic is on vacation this week).
Two of Business Week’s worst predictions of 2008.
9. “In today’s regulatory environment, it’s virtually impossible to violate rules.” —Bernard Madoff, money manager, Oct. 20, 2007
10. A Bound Man: Why We Are Excited About Obama and Why He Can’t Win, the title of a book by conservative commentator Shelby Steele, published on Dec. 4, 2007.
Here’s one from Foreign Policy.
“[A]nyone who says we’re in a recession, or heading into one—especially the worst one since the Great Depression—is making up his own private definition of ‘recession.’” —Donald Luskin, The Washington Post, Sept. 14, 2008
Barry Ritholtz has a collection of ’em.
Late update! Bonus prediction of the actual future! With maps!
Mr. Panarin posits, in brief, that mass immigration, economic decline, and moral degradation will trigger a civil war next fall and the collapse of the dollar. Around the end of June 2010, or early July, he says, the U.S. will break into six pieces — with Alaska reverting to Russian control.
via Felix Salmon
Abbreviated Dean Baker.
Challenging Group Thinking Economists on Budget Deficits and the Dollar
… In short, the economists who claim that the large budget deficits will lead to a fall in the value of the dollar have no more of clue than when they were denying the existence of a housing bubble two or three years ago. …
