Sometimes I think it’s useful to drop our abstract theories of social hierarchies and naively look at the world. In that spirit, check out the photo below from a WSJ story about the drug war in Mexico.
Now if you didn’t have any other information to go on–or better yet, if a visitor from the past or future came to our time and saw this scene–which group of people in the photo seems to pose the clear and present danger to peaceful society?
In Amazon’s economics category (HT2LRC), beating out Krugman, Galbraith, and all my friends. Of course, Krugman’s book has been out for a while, and I think Galbraith’s was written before Lincoln was shot.
Still, good job, Tom and Burt!
On Thursday night I reappeared on the Pete Kaliner show. Here is the link where you can play the audio.
Also, there is a point where he accidentally hangs up on me, and when I come back I say, “I thought maybe the Obama Administration didn’t like the way the conversation was going” (or something). I just want to make sure you catch my funny, because it’s hard to hear.
Lately Arnold Kling has been fending off accusations of being a racist, because he (foolishly) had a blog post saying the stimulus bill was really about “reparations” and then at a Heritage Foundation/Club for Growth event, he called the Obama crew a bunch of thugs. Here is how Vanity Fair blogger James Wolcott described it:
A few days ago notice was taken…of economist Arnold Kling’s contention that the Obama stimulus plan was actually “reparations” in disguise. Given the complexion of our new president, this was interpreted as injecting a needless bit of race-baiting into the economic debate…
And there the matter might have rested had not Kling surrendered to heat of candor today at a Heritage Foundation/Club for Growth confab and decried, “Barack Obama is destroying my daughter’s future. It is like sitting there watching my house ransacked by a gang of thugs.”
Now if Kling can’t comprehend the implication of racial menace encoded in daughter-gang-thugs/home invasion, he’s either fatuously clueless–too innocent for this wicked world–or weaselly disingenuous, and a drama queen either way. Did he feel the sanctity of his home was being violated when the costs of the Iraq war shot into outer space? Did he picture marauders smashing cherished mementoes when Hank Paulson introduced TARP? Anytime Obama’s name and “thug” are thrown in close proximity, it’s a pretty sure bet that the speaker or author intends to fan the anxiety and animosity of those who think Obama’s presidency represents black grievance gloved with the iron fist of the state–and out to punish whitey.
But if you watch the first 70 seconds of the clip below, you almost feel embarrassed for Wolcott. Oops. I’m sure the apology will come out after the long weekend.
BTW, Kling mentions here that Krugman repeated the quote. Incidentally, I personally have no problem with the Times not “fact checking” an op ed columnist’s quotes. But if Krugman doesn’t post a clarification–not necessarily an apology–on his blog, well, I don’t know what. I’m already not his best friend.
This CNBC story explains that because of the stimulus hijinx and other skullduggery, fund managers are acquiring larger exposure to gold, often through ETFs such as GLD. The Exchange Traded Fund allows an investor to buy a stock (e.g. x shares of GLD) rather than buying physical gold bars and storing them somewhere. The people running GLD, in turn, go out and buy more bullion when more people pile into their ETF.
However, unless there are tax considerations–like if you are trying to shuffle around your 401k and need to buy shares of stuff to avoid withdrawal penalties–I don’t think you should put your money into a gold ETF. If the really horrendous inflation comes that I think is a real possibility, it would be perfectly consistent for the U.S. government to void all ETF shares and issue some paltry payment in dollar bills to the investors. They would give some bogus justification like “preventing a run on the dollar” or “battling the instability of hoarding.”
If you are concerned about massive price inflation and want to hedge yourself with gold and silver, I strongly recommend that you personally acquire the physical metals. And if you’re really paranoid, don’t put them in a bank.
Yesterday’s article in the WSJ is basically a less hysterical and more detail-oriented regurgitation of my Daily Reckoning article from the end of January (and which I actually wrote in December). I explained in that article that Bernanke had painted himself into a corner, because the Fed’s balance sheet had grown enormously, meaning massive price inflation had been built into the system once things calm down. But, since that build-up in the balance was designed as life support for the banking sector, how could Bernanke pull the rug out once a tepid recovery begins?
Here is how the WSJ article describes the situation:
A day after the Obama administration announced plans for a massive expansion of a joint-Federal Reserve and Treasury program to revive consumer lending, signs are emerging of challenges facing the central bank.
A growing number of the dollars the Fed is lending out to revive markets are long-term loans. Those long-term commitments could be difficult to pull back when the economy recovers and the Fed wants to drain the financial system of cash to raise interest rates.
When the Fed believes the time has come to raise interest rates, it would seek to pull cash out of the financial system by reducing the size of its massive portfolio of loans and securities. But if it is loaded down with long-term commitments, that could be tricky to pull off….
Because the Fed worries about preserving its monetary-policy options, it could be hesitant to push much further on long-term lending. Selling off such holdings down the road “could be a problem in thin and illiquid markets,” said Vincent Reinhart, an American Enterprise Institute economist and former Fed staffer.
Incidentally, I agree with Jim Chappelow–in the comments of my post on collapsing borrowing from the Fed–that the drops in base and other measures is probably just a temporary blip, while Bernanke gets his ducks in a row for the massive injections that are going to be necessary to keep all of Obama’s plates spinning. The Fed is going to have to “help” with just about every economic initiative being discussed, and I think when the optimistic scenarios fail to materialize (and they will), everyone will say, “Ah forget it, Ben, just print it.”
Congressman Says He Was Literally Warned World Economy Would Collapse If Didn’t Fork Over $700 Billion to Paulson
It’s nice that these details are trickling out. (HT2 Drudge) (You can move the pointer to 2:00 and start there, but the beginning is good to see him get phone-slapped by an irate lady.)
I thought these two graphics for this WSJ story on Geithner’s underwhelming financial bailout plan were hilarious: