Euro vs. the Dollar
I am one of the contributors to a new financial newsletter out of Ireland. My topic this month was to predict the relative fortunes of the dollar vs. euro. I said I thought that by 3Q the dollar would fall at least to $1.50 / euro and probably more. I’m going to ask the editor if back issues will be posted online, but I think it’s OK to give this excerpt:
In contrast to the reckless Federal Reserve, the European Central Bank is behaving much more responsibly. The ECB is definitely adopting an “easy” policy to stimulate the economy, but its actions are within the bounds of reason: The annualized three-month growth rate in bank capital and reserves is running around 25 percent. (In contrast, U.S. bank reserves with the Fed in the last three months have grown at an annualized rate of over 400,000 percent–that is not a typographical error.)
Incidentally, even though I’ve quadruple-checked it, that number still seems impossible. But U.S. bank reserves were some $100 billion in September, and then were some $800 billion in December. So that means over the course of three months, they increased by a factor of 8. So that means over a year, they would grow by a factor of 8x8x8x8 = 4096, which is 409,600%, and then you subtract 100% to make it a growth figure.
Am I doing that right? Did bank reserves grow at more than a 400,000% annualized rate in the last three months of 2008?
"Well do you have a better idea??"
I just answered some questions for a Slovakian business weekly. (I’ll post it here if/when it’s online.) One of the questions was what I would recommend to the governments of the world, since (as would be clear in my earlier answers) I didn’t think “stimulus” spending programs were a good idea. My answer:
Governments should slash their spending and then cut taxes by the same amount. Ideally, the tax cuts should be implemented not through “rebates” but instead through reductions in the marginal rates applied to income. This would make the tax cut not merely a transfer from the government back to the taxpayer, but would also provide incentives for people to produce more. At the same time, central banks should stop inflating their currencies. Because of their monopoly positions, we can’t say what the “right” interest rate is, but I am pretty sure it is higher than 0%.
President Obama’s First Speech
Just heard it while getting lunch. I had to turn to the NPR feed because Rush kept making comments and it was annoying me. Obama certainly is a wonderful speaker, and if you are going to be stuck listening to somebody for 4 years, it could be worse. I loved his themes on foreign relations, but I am waiting to see if he actually closes Gitmo, draws down troops “over there” (and moving troops from Iraq to Afghanistan doesn’t really count), stops warrantless wiretapping, etc. Since I believe he has only promised to just do the first of these, I am not optimistic.
On the domestic front, his rhetoric was pleasing to the ear but not to the brain. In particular, he said something to the effect that he was going to use government smartly to make sure our economy exhibits all that a free people can produce. That’s a whopper a la Mencken’s critique of the Gettysburg Address.
Last nitpick: He said he was the 44th person to take the oath, but I think Cleveland’s non-consecutive terms mess that up. So that poses an interesting issue, of how that slight mistake got into the speech that will go down in history. I can think of at least three explanations:
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(A) Obama deviated from the teleprompter. The prepared remarks said this was the 44th time a person had taken the oath, and Obama just switched it a little bit in the moment.
(B) Obama’s team knew of the Cleveland technicality, but didn’t want to confuse people, and it sounded weird to say a technically correct statement using the 44 number.
(C) No one on Obama’s team had enough of an inkling of U.S. presidential history to bother checking that the number of the presidency was the same as the number of presidents.
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(A) is fine, (B) is a little worrisome but not awful, whereas (C) is scary.
And I’m betting it was (C).
Another Push for "Master Resource"
I mentioned this new website when it first launched, but for those interested in energy issues, “Master Resource” is definitely worth checking out. Now that people are back from vacations etc., there are a bunch of new posts going up. In particular, check out Chip Knappenberger, who is a co-author with Pat Michaels. I loved this post, where Chip takes on the warnings of global warming leading to huge agricultural losses. Chip posts the following two charts, which paint a more reassuring picture:
Does God Want You to Slaughter Your Enemies?
For this week’s post involving the finer things, I want to discuss this news story (HT2LRC):
All civilians living in Gaza are collectively guilty for Kassam attacks on Sderot, former Sephardi chief rabbi Mordechai Eliyahu has written in a letter to Prime Minister Ehud Olmert.
Eliyahu ruled that there was absolutely no moral prohibition against the indiscriminate killing of civilians during a potential massive military offensive on Gaza aimed at stopping the rocket launchings.
The letter, published in Olam Katan [Small World], a weekly pamphlet to be distributed in synagogues nationwide this Friday, cited the biblical story of the Shechem massacre (Genesis 34) and Maimonides’ commentary (Laws of Kings 9, 14) on the story as proof texts for his legal decision.
According to Jewish war ethics, wrote Eliyahu, an entire city holds collective responsibility for the immoral behavior of individuals. In Gaza, the entire populace is responsible because they do nothing to stop the firing of Kassam rockets.
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In the letter, Eliyahu quoted from Psalms. “I will pursue my enemies and apprehend them and I will not desist until I have eradicated them.”Eliyahu wrote that “This is a message to all leaders of the Jewish people not to be compassionate with those who shoot [rockets] at civilians in their houses.”
Now of course, a secular humanist could understandably say: “See what a barbaric book that is? Humanity will never stop senseless warfare so long as people in this supposedly rational age keep reading this garbage.”
Yet things are not so simple for someone like me, who: (a) is a Christian, (b) believes the Bible is the inspired Word of God, and (c) is a pacifist. I can’t simply reject the rabbi’s conclusions, because his reference to scriptural slaughter–some of which was ordained by God–is accurate. So if I recoil from his views (and I do), then I need to reconcile my rejection with his pointing to previous Biblical episodes.
Before proceeding, the two standard caveats on these types of posts: (1) I am not trying to convince a non-Christian here. I am talking to other Christians who may be struggling with this type of cognitive dissonance. (2) This is a quick blog post. I am not claiming that this is a definitive statement of theological truth.
Now then, on to my various reactions on these issues:
#1) If God told the Israeli forces they should carpet bomb Gaza, then they should obey Him. In the Old Testament, when God told the Israelites to wipe out certain cities–even killing the children–it was moral for them to obey Him.
#2) Absent a direct command from God, we need to live our lives the way we believe He wants us to. As a Christian, I do not think God wants me to slaughter my enemies. Jesus fulfilled the Mosaic Law and gave all (willing) humans a new covenant. He replaced “an eye for an eye” with “love your enemy.” Of course, even born again Christians will disagree on what that means in practice; there are many such Christians serving in the U.S. armed forces. But I think it is safe to say that the rabbi’s views are not compatible with the teachings of Jesus. (To repeat, I am talking to other Christians with this blog post. I am in no position to say whether the rabbi is correctly crystallizing Jewish law.)
#3) This raises a favorite snare of the atheists: Am I now a relativist, saying it was OK for the Israelites to indiscriminately slaughter children thousands of years ago, but it’s not OK for IDF soldiers to do so today? (Note that I am not saying IDF forces are indiscriminately slaughtering children in Gaza. Rather, I am responding to the rabbi’s claim that they have the moral authority to do so.)
Let’s deal with the philosophical issue first. Is an action good because it conforms to an objective moral law, or is it good because God says so? (To put it another way, is God Himself good by definition, or is He good because His actions/nature match independent, objective criteria of goodness?)
As with most theological paradoxes, I think this standard college freshman question sets up a false dichotomy. God is good in the same way that 2+2=4. Now, does 2+2 really equal 4 in objective reality, or does it merely equal 4 by definition? If you can see the strangeness of the dichotomy in the arithmetical context, you can at least understand my thoughts regarding God’s goodness. A final curve ball on this stuff: I also claim that God is good, and 2+2=4, because of decisions that God made. In other words, it’s weird to ask whether God is good merely by definition, versus some objective characteristics of goodness that we can derive using our reason, because God created us, our brains, our minds, and the logical structure of the universe as we perceive it. Reality is the way it is, because God decided He preferred it that way.
After that philosophical tangent, we come back to the practical question: If I’m right, then why would God change the rules? Why was it OK for the ancient Israelites to purposely kill the children of their military foes, but it’s not OK for soldiers today?
The answer is that God didn’t change the rules. It is our human limitations that try to impose a very short list of principles that guide moral behavior. God did NOT say to Joshua, “I want you to lead your men and annihilate the city before you, and by the way, I just laid out a general command for the rest of eternity.”
When I’m taking my son outside, I tell him to put on a different coat in the winter than in the summer. That’s not because I’m a relativist, it’s because I tailor my specific instructions to his specific circumstances. Now it’s true, I also try to teach him general rules to follow in his life, but even if I had perfect foresight and were completely altruistic and honest, I couldn’t give him at 4 years of age the complete list of all rules he would need in his life, because he wouldn’t be able to remember them all. (Suppose for the sake of argument that it was actually possible to condense the information at all. After all, it might not be; he might have to instead see a complete catalog of all future histories depending on his actions, and then just pick the “optimal” choice at every point along the way, in which case the most economical description of how he ought to live would be a listing of every choice he would make until he died.)
Well, I think I’ve given far more than enough in this post to fascinate and/or alienate most readers. In the future we can discuss why in the world it was a good idea (and it must have been) for God to order the ancient Israelites to slaughter babies.
Potpourri
* NASA scientist James Hansen has declared that Obama has four years in which to save the planet (from manmade climate change). I don’t see what the rush is. As Dr. Hans Zarkhov (formerly at NASA) can attest, the last time the fate of the planet was at stake, the hero waited until there were only 14 hours left before taking decisive action. Details here.
* Robert Wenzel, hunkered down in DC, gives some great shots of preparations for the leader of the “free” world.
* Not only are these leftists humorless, they apparently don’t realize that corporations are owned by people.
Becker Cribs From Murphy?
Von Pepe suggests so, pointing out this passage:
[W]ith unemployment at 7% to 8% of the labor force, it is impossible to target effective spending programs that primarily utilize unemployed workers, or underemployed capital. Spending on infrastructure, and especially on health, energy, and education, will mainly attract employed persons from other activities to the activities stimulated by the government spending. The net job creation from these and related spending is likely to be rather small. In addition, if the private activities crowded out are more valuable than the activities hastily stimulated by this plan, the value of the increase in employment and GDP could be very small, even negative.
Unfortunately I don’t think the timing works. My piece ran on January 12, whereas Becker’s was posted the day before. (Of course I wrote mine before Becker’s ran, so I am certain I didn’t subconsciously take from him without attribution.)
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