Sunday ReadsPosted: November 28, 2010 Filed under: Breaking News, Democratic Politics, Diplomacy Nightmares, Elections, Global Financial Crisis, Gulf Oil Spill, morning reads, The Great Recession, The Media SUCKS, U.S. Economy | Tags: Bobby Jindal, euro problems, Fed loathing, Irish bankruptcy, Korea, Mortgage defaults, North Korea attacks South Korea, Pigou Tax banking risk, QE2, Rahm Emanuel eligibility, Republican presidential wannabes, Right wing feminotexactlyism 59 Comments
Here’s an interesting piece in the Christian Science Monitor about an attempt to knock Rahm Emanuel off the ballot for the Chicago Mayoral election. Emanuel’s eligibility is in question because of his residency in the District as Obama’s Chief of Staff. Does that duty deserve similar treatment to active duty soldiers?
Chicago area election lawyer Burt Odelson filed his challenge to the Chicago Board of Elections, saying that Emanuel does not meet a state law that requires all candidates to be residents of the municipality in which they seek office for at least one year. He filed on behalf of two Chicago residents; on Wednesday, five other challenges were filed separately. Tuesday is the last day objections can be filed to the election board.
Central to Mr. Odelson’s argument is that Emanuel was removed from voter rolls twice during his two-year tenure in Washington, when he served as White House chief of staff to President Obama. During that time, Emanuel rented out his home. His campaign says he maintained ties to the city by paying property taxes, maintaining a driver’s license, and voting in the February primary.
Economists Olivier Jeanne and Anton Korinek at VOX are suggesting Pigou taxes (i.e. sin taxes) on financial corporations that would vary with credit booms and busts. Rules would change depending on the state of the economy. Suggestions include requiring higher capital levels or placing some kind of penalty on an organization when they take on large amounts of credit during an asset price boom. The purpose is to impose the social cost of bailing the organization out on them to prevent from doing so and causing havoc in the financial markets. The idea is that they’d be less able to profit from the leverage so they’d be less likely to go for the risk. Suggestions specifically target mortgages with balloons or “teaser rates” since they are more risky and more likely to blow up in the face of market troubles. The tax would then be used to fund any required bailout.
The optimal tax should also be adapted to the maturity of debt. Long-term debt makes the economy less vulnerable to busts than short-term debt, because lenders cannot immediately recall their loans when the value of collateral assets declines. For example, 30-year mortgages make the economy less prone to busts than mortgages with teaser rates that are meant to be refinanced after a short period of time.
An important benefit of ex-ante prudential taxation during booms is that it avoids the moral hazard problems associated with bailouts. When borrowers expect to receive bailouts in the event of systemic crises, they have additional incentives to take on debt. If the financial regulators accumulate a bailout fund, borrowers may increase their indebtedness in equal measure, leading to a form of “bailout neutrality”
Real Time Economics over at the WSJ has some interesting numbers up on Mortgage defaults. The ever increasing backlog of defaults is worrisome.
492: The number of days since the average borrower in foreclosure last made a mortgage payment.
Banks can’t foreclose fast enough to keep up with all the people defaulting on their mortgage loans. That’s a problem, because it could make stiffing the bank even more attractive to struggling borrowers.
In recent months, the number of borrowers entering severe delinquency — meaning they missed their third monthly mortgage payment — has been on the decline, falling to about 700,000 in October, according to mortgage-data provider LPS Applied Analytics. But it’s still more than double the number of foreclosure processes started.
I personally enjoyed reading this Michelle Goldberg take-down on the Daily Beast of certain right wing women politicians who are trying to campaign as the ‘real’ feminists while throwing out their rewrites of herstory. The Right Wing always rewrites history with the worst revisions. I’m calling what they adhere to feminotexactlyism. Here’s a few tidbits.
The historical revisionism here recalls that of Christian conservatives who try to paint our deistic Founding Fathers as devout evangelicals. At one point, Palin refers to Elizabeth Cady Stanton’s “Declaration of Sentiments,” which came out of the historic 1848 women’s rights convention at Seneca Falls, New York. Stanton deliberately echoed the language of the Declaration of Independence, referring to the rights that women are entitled to “by the laws of nature and of nature’s God.” To Palin, this mention of God proves that Stanton shared her faith: “Can you imagine a contemporary feminist invoking ‘the laws of nature and of nature’s God?’ These courageous women spoke of our God-given rights because they believed they were given equally, by God, to men and women.”
Not really. Stanton was a famous freethinker, eventually shunned by more conservative elements of the women’s movement for her attacks on religion. In one 1885 speech, she declared, “You may go over the world and you will find that every form of religion which has breathed upon this earth has degraded women.” Ten years later, she published the first volume of The Woman’s Bible, her mammoth dissection of biblical misogyny. Stanton was particularly scathing on the notion of the virgin birth: “Out of this doctrine, and that which is akin to it, have sprung all the monasteries and nunneries of the world, which have disgraced and distorted and demoralized manhood and womanhood for a thousand years.”
For more debunking, including that silly one about Susan B Anthony being some how against abortion, go read the article. Facts are such tractable things to Republicans that I wonder why any sane person would quote one without fact checking them first. I just can’t take any more presidential candidates needing basic re-education; let alone presidents that require it.
Speaking of another one in that category, the national spotlight isn’t doing much good for my governor either. I’ve got two sources I’ll quote here. The first one is The American Thinker which you may recall is conservative. They’ve even got his number. It seems that just writing books about yourself is not going to be the path to Presidency any more.
Louisiana Governor Bobby Jindal is busy promoting his new tome Leadership and Crisis with book tour stops all over the country. This latest tour comes on top of his previous speaking tours to raise campaign cash for himself and various Republican candidates around the country. The only place Governor Jindal has trouble visiting is his home state of Louisiana. The joke in Louisiana is that Bobby is known as a governor in 49 states.
Louisiana blogger Lamar White, Jr. takes it even farther. Yup, Jindal’s our ROAD Scholar. We can’t keep professors on university payrolls but we can sure pay for him to promote his self-serving book.
The oil spill was a huge scare, but instead of being honest about it, Jindal used it as an opportunity to advance his own political celebrity and perpetuate ridiculously disconcerting and almost masochistic myths about the effects of a deepwater drilling moratorium, none of which turned out to be true. He spent more time posing for the cameras and tagging along with CNN than practically anyone else, yet, in his “memoir,” it’s the Obama Administration who cared about media perception, not him. As an example, he cites a letter he delivered requesting an increase for federally-subsidized food stamps, suggesting that the Obama Administration delayed on their response. According to White House officials, Jindal’s formal request was delivered on the same day that Jindal called a press conference decrying the delays. Pure political theater.
But most importantly, when Jindal says Congressmen should spend more time at home, he should probably listen to his own advice. During the last couple of years, Jindal’s become more known for the things he has done outside of Louisiana than for anything he has done here in Louisiana. Before the November elections, he spent weeks touring the country to support fellow Republican candidates, and only two weeks after the election, he embarked on yet another nationwide tour, this time promoting his memoir.
I have to admit that this next Republican presidential primary is going to have me chewing my finger nails off. If this is the best they have to offer, we are SO sunk.
Both the Koreas are upping the stakes in the Yellow Sea. North Korea is sending veiled threats to the U.S about sending its air carrier–USS George Washington–into the area for joint ‘war games’. SOS Clinton is in talks with the Chinese. This is from The Guardian.
The world’s diplomatic corps is working feverishly to contain the crisis and make sure there is no further conflict. China, which is widely seen as having influence over the North, has held talks with the US between its foreign minister, Yang Jiechi, and the secretary of state, Hillary Clinton. “The pressing task now is to put the situation under control,” the Chinese foreign ministry quoted Yang as telling Clinton.
Meanwhile the US stressed that its military operation with the South – which includes deployment of a nuclear-armed aircraft carrier – was not intended to provoke the North. Yet the North’s news agency addressed that issue: “If the US brings its carrier to the West Sea of Korea [Yellow Sea] at last, no one can predict the ensuing consequences.”
The the joint US-South Korea exercises started late last night. Here’s the report on them from English Al Jazeera.
South Korea’s military later said that explosions – possibly the sound of artillery fire – were heard on Yeonpyeong Island.
South Korea’s Joint Chiefs of Staff said that what is believed to have been a round of artillery was heard on Sunday from a North Korean military base north of the sea border dividing the two Koreas. It was not immediately clear where the round landed.
Residents of the island were ordered to take shelter in underground bunkers, but that order was later withdrawn, according to Yonhap.
Dozens of reporters, along with soldiers and police and a few residents, headed for the bunkers, where they remained for 40 minutes.
I’ve been watching the euro crisis again as the problems with Ireland seem to be creating problems with Spain now. My print copy of The Economist didn’t come this morning so I’ve been having to read the cyber ink here. My Saturday night soak in a hot bath was just not the same without it. So,here’s my idea of a chiller thriller.
Europe’s rescue plan is based on the idea that Ireland and the rest just need to borrow a bit of cash to tide them over while they sort out their difficulties. But investors increasingly worry that such places cannot, in fact, afford to service their debts—each in a slightly different way. In Ireland the problem is dodgy banks and the government’s hasty decision in September 2008 to guarantee all their liabilities. Some investors think this may end up costing even more than the promised EU/IMF loans of some €85 billion ($115 billion)—especially if bank deposits continue to flee the country (see Buttonwood). Ireland’s failing government adds to the doubt, because it could find it hard to push through an austerity budget before a new election (see article). In Greece the fear is that the government cannot raise enough in taxes or grow fast enough to finance its vast borrowing. Likewise in Portugal, which though less severely troubled than Greece nevertheless seems likely to follow Ireland to the bail-out window.
If the panic were confined to these three, the euro zone could cope. But Europe’s bail-out fund is not big enough to handle the country next in line: Spain, the euro’s fourth-biggest economy, with a GDP bigger than Greece, Ireland and Portugal combined.
One has to ask how much the Germans are going to pony up the cross country fiscal policy this will take. I’m still not ready to call the eminent demise of the EURO since every study that I’ve read–and I’ve read lots over the last three years–points to how much trade and foreign direct investment has come from integration. This will test a lot of wills; good an otherwise. Meanwhile, the Irish are rebelling over their deal. They don’t want austerity measures any more than the Greeks do or we do for that matter.
The Economist also weighed in on the “Republican Backlash” to the QE2 calling it perplexing which I believe is equal to me being baffled by the whole thing. It’s still either they don’t know a damn thing (e.g. Republican presidential wannabe candidate number 1 on the link up top) or they just want the power so they don’t really care (e.g Republican presidential wannabe candidate number 2 on the link up top there). Has to be. What is still the weirdest thing to me is how many of them seem to hate Bernanke who is–afterall–a fellow Republican and a Dubya appointee. What a strange, strange world this has turn out to be. I mean Ron Paul is going to be in charge of the House subcommittee on Monetary Policy next year. That’s like putting a representative of Astronauts for a flat earth society in charge of NASA.
Yet the fight is not ultimately over numbers, but ideology. To be sure, the Fed’s reputation has suffered among Americans of all political stripes over its failure to prevent the crisis and its bail-outs of banks. But the tea-party movement holds it in particularly low regard, seeing it as the monetary bedfellow of the hated stimulus and bail-outs. Some 60% of tea-party activists want the Fed abolished or overhauled, according to a Bloomberg poll. One of the movement’s heroes is Ron Paul, a congressman from Texas who wants to scrap the Fed outright and bring back the gold standard. His son Rand, newly elected as a senator from Kentucky, has also been stridently critical. QE can be made to seem sinister: an animated video on YouTube that portrays it as a conspiracy between Goldman Sachs and the Fed to fleece the taxpayer has been viewed over 2m times.
The ideological content of the backlash should not be overestimated. In 1892 William Jennings Bryan, later the Democratic presidential candidate, declared: “The people of Nebraska are for free silver and I am for free silver. I will look up the arguments later.” Liberals accuse the Republican leadership of likewise concocting an excuse to rally their base against Barack Obama. Indeed, the letter to Mr Bernanke criticises QE2 in much the same language used to oppose fiscal stimulus: as a dampener of business confidence and stability.
Well, I’ve just about had it with the print news today. Do you suppose the Sunday News Programs will have anything on more meaningful?
Ah, probably not.