Business As Usual – One hopes

http://delong.typepad.com/sdj/2009/09/in-which-we-nominate-kenneth-almquist-to-the-order-of-heroes-of-intellectual-labor-third-class.html

One more thing about incentives. There has been no massive public outcry for really deep, radical changes in Wall Street. There will be changes, but they won’t be huge ones. The reason for this is simple. The Dow is at 9700, and unemployment seems to be stabilizing.

If the Dow were at 6000 and unemployment at 15%, there would be huge, angry, lynch mobs looking for bankers to string up, and there would be the political will and incentive for vast, deep, and radical changes in Wall Street.

As it is, things seem to be getting back to normal, and people aren’t quite as angry as they were a few months ago. With people not angry, people just don’t care that much about radical changes to the financial system, and that means “business as usual” when it comes to hammering out the details.

If we get back to Dow at 12000 and unemployment at 6%, then all will be forgiven. If we have a double dip, and things start going into free fall again, the public will be back to “shoot the bankers” and they’ll probably be even angrier than they are now.

Now what I’m thinking about is what are the minimum set of changes that we absolutely have to make to the financial system to make sure that I don’t have to go through this hell again.

Tire tariffs and the general cluenessness of the New York Times

I’ve been in this discussion of the Chinese tariff on Brad Delong’s website,

http://delong.typepad.com/sdj/2009/09/barack-obama-does-something-really-stupid-tire-tariffs.html

when this article from the New York Times comes in.  Geeze they are totally clueless.

China unexpectedly increased pressure Sunday on the United States in a widening trade dispute, taking the first steps toward imposing tariffs on American exports of automotive products and chicken meat in retaliation for President Obama’s decision late Friday to levy tariffs on tires from China.

China’s response is only unexpected if you know nothing about international trade and Chinese politics.  The Chinese response is perfectly expected if you have the slightest idea of what is going on.  It’s not as if the Chinese Ministry of Commerce, suddenly had a meeting on Saturday when they decides what to do.

Even if you know *nothing* about Chinese politics and economics, the prospect that the Chinese government would impose some sort of tariff in response to Obama’s tire tariff is hardly unexpected.  What would you expect the Chinese government to do, hug and kiss the US trade negotiations and heap love and praise on them.  Thank you, thank you, thank you for imposing tire tariffs.  Sheesssshhh.

Also, saying that maybe you will have the WTO look into something is not a *strong countermove*.

The Chinese government’s strong countermove followed a weekend of nationalistic vitriol against the United States on Chinese Web sites in response to the tire tariff. “The U.S. is shameless!” said one posting, while another called on the Chinese government to sell all of its huge holdings of Treasury bonds.

My God!!!!  This is dumb.  The New York Times is reduced to figuring out what is going on from *BLOG POSTS*.   What’s worse they are mentioning a blog posting without doing something creative like maybe linking to the posts.

So let me get this straight.  Some college student in some internet cafe somewhere starts writing some angry blog posts in between games of World of Warcraft and surfing internet porn.  The New York Times reads this and concludes that China is about to declare economic war on the US.  OK maybe, but can you at least do me the favor of *linking* to that blog post?

But the timing of the announcement — on a weekend and just after the tire decision in Washington — sent an unmistakable message of retaliation. The official Xinhua news agency Web site prominently linked its reports on the tire dispute and the Chinese investigations.

Well maybe can you link to that website?

Also you might try to find someone that can read Chinese, who can point out that the tire dispute isn’t being mentioned very heavily at all on any Chinese website.  Finally, you aren’t getting the hint.  The tire dispute on Xinhua is number two.  If you look at the number one article on any Chinese website (that is, assuming you can read Chinese), you’ll find that the number one article on Xinhua is Hu Jintao visiting the G20 summit to talk about financial regulation.

“Why did our government purchase so much U.S. government debt?” said one posting signed by a “Group of Angry Youths.” It continued, “We should get rid of all such U.S. investments.”

Yes.  The “Group of Angry Youths.”  As we all know the “Group of Angry Youths” is such an important group in Chinese trade policy.  Now that Obama has got the “Group of Angry Youths” upset, we know that there is going to be WAR!!!!!  The Politburo thought that they were going to issue just a formulaic response, but then they started reading the blogs and found out that the “GROUP OF ANGRY YOUTHS” was upset, so Hu Jintao got on the phone and told the Minister of  Commerce,  we need to do something because internet bloggers are after us.

Actually as the day goes on, I expect to see the New York Times gradually change.  Also, if any reporters from the NYT really do want some ideas as to what is going on.  Just go to the discussion on Brad Delong’s blog.

Here the general cluelessness of the NYT is just funny.  The fact that we got into a major war based on “intelligence” that wasn’t much better than this makes it less funny.

Also, I don’t have a problem with the NYT getting it’s news from blog posts and websites, but do you mind maybe *linking* to those sites.

Reading the whole damn speech

One problem with the sound bite era is that people read clips of speeches rather the whole damn thing.  For example  This is the whole speech the Gordon Gekko made which is very different from the clip.

Gordon Gekko: [at the Teldar Paper stockholder's meeting] Well, I appreciate the opportunity you’re giving me Mr. Cromwell as the single largest shareholder in Teldar Paper, to speak. Well, ladies and gentlemen we’re not here to indulge in fantasy but in political and economic reality. America, America has become a second-rate power. Its trade deficit and its fiscal deficit are at nightmare proportions. Now, in the days of the free market when our country was a top industrial power, there was accountability to the stockholder. The Carnegies, the Mellons, the men that built this great industrial empire, made sure of it because it was their money at stake. Today, management has no stake in the company! All together, these men sitting up here own less than three percent of the company. And where does Mr. Cromwell put his million-dollar salary? Not in Teldar stock; he owns less than one percent. You own the company. That’s right, you, the stockholder. And you are all being royally screwed over by these, these bureaucrats, with their luncheons, their hunting and fishing trips, their corporate jets and golden parachutes.

Cromwell: This is an outrage! You’re out of line Gekko!

Gordon Gekko: Teldar Paper, Mr. Cromwell, Teldar Paper has 33 different vice presidents each earning over 200 thousand dollars a year. Now, I have spent the last two months analyzing what all these guys do, and I still can’t figure it out. One thing I do know is that our paper company lost 110 million dollars last year, and I’ll bet that half of that was spent in all the paperwork going back and forth between all these vice presidents. The new law of evolution in corporate America seems to be survival of the unfittest. Well, in my book you either do it right or you get eliminated. In the last seven deals that I’ve been involved with, there were 2.5 million stockholders who have made a pretax profit of 12 billion dollars. Thank you. I am not a destroyer of companies. I am a liberator of them! The point is, ladies and gentleman, that greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge has marked the upward surge of mankind. And greed, you mark my words, will not only save Teldar Paper, but that other malfunctioning corporation called the USA. Thank you very much.

The other example of this is this quote from Kennedy

First, I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to the earth.

It was part of a much, much longer speech.

http://www.presidency.ucsb.edu/ws/index.php?pid=8151

And the context even within that section was interesting….

First, I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to the earth. No single space project in this period will be more impressive to mankind, or more important for the long-range exploration of space; and none will be so difficult or expensive to accomplish. We propose to accelerate the development of the appropriate lunar space craft. We propose to develop alternate liquid and solid fuel boosters, much larger than any now being developed, until certain which is superior. We propose additional funds for other engine development and for unmanned explorations–explorations which are particularly important for one purpose which this nation will never overlook: the survival of the man who first makes this daring flight. But in a very real sense, it will not be one man going to the moon–if we make this judgment affirmatively, it will be an entire nation. For all of us must work to put him there.

Secondly, an additional 23 million dollars, together with 7 million dollars already available, will accelerate development of the Rover nuclear rocket. This gives promise of some day providing a means for even more exciting and ambitious exploration of space, perhaps beyond the moon, perhaps to the very end of the solar system itself.

Third, an additional 50 million dollars will make the most of our present leadership, by accelerating the use of space satellites for world-wide communications.

Fourth, an additional 75 million dollars-of which 53 million dollars is for the Weather Bureau–will help give us at the earliest possible time a satellite system for world-wide weather observation.

Let it be clear–and this is a judgment which the Members of the Congress must finally make–let it be clear that I am asking the Congress and the country to accept a firm commitment to a new course of action-a course which will last for many years and carry very heavy costs: 531 million dollars in fiscal ‘62–an estimated seven to nine billion dollars additional over the next five years. If we are to go only half way, or reduce our sights in the face of difficulty, in my judgment it would be better not to go at all.

Now this is a choice which this country must make, and I am confident that under the leadership of the Space Committees of the Congress, and the Appropriating Committees, that you will consider the matter carefully.

It is a most important decision that we make as a nation. But all of you have lived through the last four years and have seen the significance of space and the adventures in space, and no one can predict with certainty what the ultimate meaning will be of mastery of space.

I believe we should go to the moon. But I think every citizen of this country as well as the Members of the Congress should consider the matter carefully in making their judgment, to which we have given attention over many weeks and months, because it is a heavy burden, and there is no sense in agreeing or desiring that the United States take an affirmative position in outer space, unless we are prepared to do the work and bear the burdens to make it successful. If we are not, we should decide today and this year.

Toward a new two-party system

Also if you want a two party system, don’t worry about the Republicans. They are in the process of self-destruction. If you look at the real health care debate (i.e. not the death panel non-sense), the real fights have been between the Democratic left and the Democratic right over things like the role of private insurers and the “public option.” One possibility is that if the Republicans don’t get their act together, is that well have a two party system, but the Republicans won’t be one of them.

Obama is very clearly a member of the Democratic right. On every single issue in which he has to choose between moving left and moving right, he has moved right. The left wing of the Democratic party has put up with him only because there is fear that the Republicans are worse. If it becomes obvious that the Republicans are not going to be in power, then there is no reason for the Democratic Left to support Obama or his ideological successors, and they probably will start their own party. Alternatively if the Democratic Left gets in control of the party and it’s clear that the Republicans won’t play ball, the the Democratic Right will bolt and start their own party.

Alternatively, the Republicans could come up with a political genius like Reagan to reconstitute some sort of coalition, but it’s really, really hard for me to imagine Sarah Palin saying good things about big corporations, thereby gaining access to corporate and lobbyist money. The thing about Reagan is that he could combine different Republican factions because he wasn’t one of them. He wasn’t a member of the religious right, the economic right, or the Cold War hawks. Right now, there isn’t any major political figure that I can see that appeals to the remaining factions within the Republicans, but aren’t one of them.

One thing about Democrats is that they are willing to make tactical compromises. I’m sure that Michael Moore dislikes me and everything that I stand for (corporate America good!!!!!), but he is willing to put up with me as long as it means keeping someone worse out of power, and no one is under any illusions that this is anything other than a marriage of convenience.

The problem is that I don’t see this sort of willingness to tactically compromise among the Republicans.

Gordon Gekko votes Democrat

Gordon Gekko here…..

I’m a Gordon Gekko, “greed is good”, Reagan/Thatcher, pro-Wall Street, corporate America-loving, pro-banking, pro-business, wannabe filthy rich, pro-finance, economic conservative, and I’m on your side.

It’s quite simple. Since I’m a fan of Gordon Gekko, I take a look at who is more willing to let me make money and keep it, and it’s not the Republicans. I’m greedy, but I’m not stupid. Helping you make money, helps me make money. Getting the economy in shape so that everyone has health care, jobs, and a decent standard of living, means that you aren’t going to get angry when I make lots and lots of money. Heck, if it is obvious that my bonus is paying for your health care and your kid’s schools, you’ll probably want me to make more money. That’s fine with me.

If you think that I make too much money, then we sit down, and you tell me how much you want? You want health care, good schools for your kids, good public transportation, a great job. Fine…. That probably works up to about a modest increase in my taxes, so have the IRS take a fraction of my salary (I probably won’t notice it), spend it on your family, and enjoy. You would regulation so that we don’t have another financial disaster? So do I. So put in government bureaucrats to monitor capital requirements and lending policy, don’t put in restrictions on salaries and bonuses, and we are all good.

The Republicans have become very anti-banking, anti-corporate, and anti-finance. There are anti-banking, anti-corporate, and anti-finance people in the Democrats, but the interesting thing about them is that they can be reasoned with. If it’s about money, then we can make a deal. Figure out how much you want and then take it.

I am a greedy bastard. I don’t like dealing with people that are crazy in a bad way. You can’t cut a deal with crazies. Once you do cut a deal, you can’t be sure that they won’t stab you in the back when you aren’t looking, and they tend to stubbornly cling to their ideas even if it means taking them and me to the poor house.

Michael Moore, Ralph Nader, and Paul Krugman aren’t like that at all.

And Barney Frank is my hero……

Making connections between Taiwan and US politics

Part of the reason I’ve been thinking a lot on how the Republican party collapsed between 2004 and 2008 as that people have been talking about Ma Ying-Jeou’s response to Morakot and W’s response to Katrina, and I’ve been thinking about how to make sure that the same thing *doesn’t* happen.  Fortunately so are people within the KMT.  We’ll see how things look like in a few months.

One thing I do find interesting is that the Western media has characterized the PRC’s response to the Dalai Lama’s visit to Taiwan as “angry.”  It really isn’t.  I’ve seen the PRC angry, this isn’t angry.  It’s also interesting to me that all of the official mention of it is in the English media.  So far the PRC has not mentioned it at all in the Chinese language press.  Also there isn’t a huge amount of coverage in the Taiwan press (either pro-blue or pro-green).  The pro-blue press is trying to forget the story.  The pro-green press is trying to do what they can to make Ma look bad by suggesting that he cooperated with the PRC in handling the public response to the visit (and I wouldn’t be surprised at all if he did).

The other thing that I find interesting is the parallels between politics in southern Taiwan and those of the southern United States.  A lot of the notion of “independence” is rather similar in both places.

Southern US politics

Here is a note on southern US politics that mutated out of a discussion on health care reform.

http://delong.typepad.com/sdj/2009/08/health-care-andrew-samwick-really-doesnt-understand-what-is-going-on.html

Getting news wholesale – Notes on the New York Times article

The blog post that I did a few days ago on the Sanlu trial got me into an interesting argument over Chinalaw, but while I was researching this, I found some interesting coincidences between a NYT article and a SSRN article on punitive damages,

http://www.nytimes.com/2008/03/26/us/26punitive.html

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=945197

Looking at the NYT article and the SSRN paper, it seems obvious what the NYT reporter did. You can do a fact by fact comparison, and every fact and point in the NYT article seems to have originated in the journal article that was the basis for SSRN paper.  The NYT reporter does cite and credit the paper and its author John Y. Gotanda for one quote, but he doesn’t mention that basically all of the facts in the article come from that one paper.

They started with the SSRN paper, and then used this to as a template in which they tracked down some of the people mentioned in the SSRN article and then interviewed them.  This isn’t a bad way of writing a news article, and the NY Times article does have some “value added” in that they went through and interviewed the people involved in some of the cases.

But I do wonder if this is a particularly got way of doing journalism.  The thing that sort of annoyed me was that they didn’t hyperlink the NYT article to the paper, which would have saved me a lot of time.  One problem with hyperlinking the article is that at that point it would have been obvious how much of the article was actually written and researched by the law professor rather than the reporter.

This gets at the problem about why newspapers are failing.  The problem is that newspapers still think of themselves as a monopoly on information.  I read the article on punitive damage awards and think to myself.  Gee, I want to know more about punitive damages awards, where can I find it?  At that point the news monopoly just says “sorry, you just get your news from us.”

After the revolution – Notes to Brad Delong

One problem that revolutionaries have is that they often are the last to be able to adapt when the revolution happens.  I’ve been reading Brad Delong’s blog, and it’s gotten less interesting since he is still bashing Republicans when they really don’t matter much to the health care debate.  The big battles are between “Business Democrats” and “Progressive Democrats” with Obama being a “Business Democrat” and the “Progressive Democrats” being the opposition party.

What basically happened in the 1980’s until 2008 is that Reagan put together a coalition of big business, religious conservatives, and Cold War hawks, and that coalition lasted until 2008 when it totally broke apart.  After the Cold War, the hawks became neo-conservatives, and the Iraq war destroyed them.  The other big realignment is more interesting.  After the crash of 2008, there was a huge shift in the interests from big business from the Republicans to the Democrats.  If you want to understand the current debates, follow the money…..

http://www.opensecrets.org/

Look at who the insurance companies, big pharma, and banks have given money to.  It’s not the Republicans, and so the current health care debate is basically an argument within the Democratic Party.  It’s even more striking if you look at the trend numbers.  Through out the 1990’s and up until the last election, business interests were overwhelming Republican.  Now the split is 55-45 favoring Democrats.

This also explains why the Republicans seem “nutty” to anyone that is on the outside.  As long as you had the Reagan coalition, you had different people, and so the Republicans had to appear “not nutty” to get the support of different groups.  If you have a small group of ideologically similar people, they are going to appear weird to outsiders.  In 2000-2006, the Republicans had an incentive to look “sane”, but right now they don’t.

After the Great Obama Realignment

http://delong.typepad.com/sdj/2009/08/todays-must-read-ezra-klein-health-care-is-not-a-negotiation-but-a-campaign—-the-liberal-revolt.html

The Republicans at this point have become irrelevant. The real argument within the Democratic Party between the “Rubin Democrats” and the “Nader Democrats.” Right now you have the White House for the most part run by “Rubin Democrats” and the “Nader Democrats” are the opposition party. Ronald Reagan created a coalition of the religious right, corporate and financial interests, and Cold War hawks. Obama destroyed that coalition.

The big shift in the last election was that corporate and financial interests basically gave up on the Republican Party and voted Democratic in a big way, which means that the only people left in the Republican Party are fanatics, which can make a lot of noise, but are otherwise irrelevant.

The big debates in health care are between various groups of people within the Democratic Party. The Republicans aren’t part of the equation at all.