James Quinn realizes there is some skullduggery afoot (HT2 Tim Swanson). I haven’t read the whole thing yet, but so far he’s my favorite part:
Part 3 of the plan was the fake stress test conducted by Tim Geithner, his Treasury Department, and the Federal Reserve. The entire stress test was a publicity stunt conducted to provide a false sense of confidence in the largest banks so they could fool investors into pouring billions of new capital into their bankrupt banks. The assumptions used in the stress test were stress free. Unemployment is already higher than the worst case scenario. The stress test time frame ended in 2010. The next wave of mortgage resets and foreclosures will hit in 2011 and 2012.
I’m not a fan. An excerpt:
The government ruins everything it touches. Many high school graduates are functionally illiterate, even though per pupil funding is much higher now than in previous generations. Despite billions in subsidies over the years, Amtrak continues to lose money. The Post Office, though not an official arm of the government, enjoys a monopoly on first-class mail and is not renowned for its efficiency. And when a comedian wants to illustrate poor customer service, his reference case is the Department of Motor Vehicles.
Why in the world do so many people want to entrust this same government with our health care?
In a post chocked full of interesting tidbits, Scott Sumner reveals that Keynes as an investor got wiped out in 1920 but his father bailed him out. That changes everything, according to Sumner:
Don’t anyone write in and tell me that Keynes made lots of other good investments, because if you’ve got a rich backstop, none of that matters. Here’s what I’d do if Bill Gates was willing to lend me $3.57 billion dollars for a day:
I’d go to Vegas and put $5 million on numbers 1 through 34 on the roulette wheel. The odds are roughly 90% I’d win. If I did so, I’d win $180 million on a bet of $170 million. I repay the $3.57 billion and pocket my $10 million dollars and be rich for the rest of my life, clipping coupons. If numbers 35, 36, 0, or 00 came up I’d bet again, this time $100 million on each number 1 through 34. If I won, I’d receive $3.6 billion, repay Gates, and have $30 million dollars to spend for the rest of my life. The odds are nearly 99% that I’d win one of these two bets. Of course if both failed, I’d be in big trouble. But that’s not very likely is it?
What’s the point? If you have a rich backstop it’s relatively easy to come up with investment strategies that will usually (not always) make you look like a genius.) From now on I will never believe anyone who tells me that Keynes was a great investor.
Unfortunately, Sumner goes on to argue that if you disagree with him, you support Hitler, or something almost as silly. But overall, still an excellent post. See too his rating of Wilson versus Harding.
It amazes me how many people still do this: If you are sending out a mass email–e.g. “everyone should read this Forbes piece on Obama’s health plan!!”–then please put your 3 dozen recipients’ email addresses in the BCC field of your email. That way, people’s privacy is more protected, and they are not susceptible to someone hitting Reply All just to say, “Wow thanks for sending that!”
In some cases, to show you care and how special people are, it might make sense to let all the recipients of your email see each other. But if the list is more than a dozen, nobody feels special.
The video from my April 9 testimony on California tax reform is finally up. No, I do not have a Gorbachev birthmark on my cheek. What happened is that the combination of the TSA’s restrictions on carrying good razors, coupled with a poor bathroom lighting situation at my hotel, meant that I didn’t realize I had caked blood on my face. Suh-weet.
So anyway, if you go to this link, you can see (portions of) my testimony. (I was the first one in the Morning portion.) If you are super super bored, check out the guy who went after me. He was so in-your-face during the Q&A period that I had to restrain myself from laughing out loud.
On June 17 Bryan Caplan wrote: “My social intelligence is a lot higher than it used to be. I still wouldn’t say that I’m “good with people.” But in my youth, I was truly inept.”
Five days later, he wrote: “I’ve got a little toenail fungus. Now that you’re done cringing in disgust, let’s get to the economics.”
…was somewhat misleading, as we explain in this opinionated post at IER. An excerpt:
There are several major flaws with the CBO approach, but perhaps the most outrageous example of sleight of hand is the CBO’s focus on after-tax income. Because Waxman-Markey will raise prices more than incomes, households will necessarily become poorer. This will push households into lower tax brackets—and thus have lower tax liabilities to the tune of roughly $8.7 billion. Normal people would consider this to be a downside of Waxman-Markey. CBO is not normal. It considers this $8.7 billion as an addition to total household income—money from heaven!—and goes about celebrating the effect of this policy without saying a thing about the cause.
Beyond the absurdity of translating rising prices into a benefit for households—on the basis that poorer people pay less in taxes—the CBO’s treatment of income tax revenues is inconsistent with its treatment of carbon allowance auction receipts. The CBO study acknowledges that households will pay higher energy prices partly because businesses will “pass on” the cost of buying emission allowances. But CBO didn’t include this component as a net cost to households, because the government could spend the auction receipts and thus recycle some of the money back into households.
Robert Wenzel sent me the below email, in reference to his hard-hitting financial P.I. site. (He sends me a candy bar every time I use that description.)
This came up as a search today:
“”bob murphy” “council of economic advisors”
The search was done by:
national archives and records administration
Are they setting up for some plans we don’t know about?
I knew this would eventually happen. See, what the clever elite do is, they identify all the really really ambitious and talented people.
And then they buy their silence.
Now I can’t prove the following, of course, but it seems entirely plausible to me: Suppose that Ben Bernanke knows beforehand what his policy decision is going to be; that it is “exogenous” to the central banker, if you want to adopt the terminology of the fancy model builders. And then Bernanke’s actual job is to come up with a big production (and he has many employees, remember) to justify what he’s doing.
Here’s a pop quiz, and hopefully we’ll get some big gun like Scott Sumner to chime in. (Scott is at that awkward state in his blogosphere career where he has to “participate” in podunk sites like mine, just to keep trying to bump his name recognition beyond the tipping point. In that regard, everyone wants to be the next Tyler Cowen. And we hate ourselves for it.)
Anyway here’s the quiz: Is there any school of thought right now that claims Ben Bernanke is doing the right thing? The Austrians think his 0% interest rate is insane, and if I’m not mistaken, there are just as many Friedmanites who think Bernanke is inexplicably failing to use the “ammunition” at his disposal. So if the economy is stuck in a rut for 5 more years, both the Austrians and the monetarists will say, “Duh, we told you this would happen if you ignored us.”
So is Bernanke following any academic blueprint to success? If not, doesn’t that make my hypothesis above more plausible?