Sunday, May 31, 2009

Money Matters

One of our perennial gold bugs on the Conservative Coffee house mailing list posted these two depressing links:

https://www.newsmaxstore.com/nm_mag/free_mischief.cfm

Advertisement for Milton Friedman's last book, written before his death.

and http://english.pravda.ru/opinion/columnists/107459-0/

More or less your standard post-Soviet Russian sour grapes. How these people hate us - and what did we do to them ? As for the person who posted this informatsia, I see that his hatred of central banking has pushed him out into the deep end, even more than usual. I suppose we'll soon be treated to his occasional homilies on the importance of returning to the gold standard, or the gold exchange standard, whatever.

Now, I'll grant you that under Bernanke's chairmanship, money is pretty worthless right now. Indeed, if Bernanke did actually put in a negative discount rate, it would be less than worthless, it would be a negative asset. And, yes, lenders are reacting to all this by putting a premium on interest rates, essentially demanding a higher yield for the money they lend you, This is not a good time to be in debt, at least if you hold undsecured debt. As far as secured debt is concerned, there is a deep problem for those whose jobs are threatened, and whose equity positions have eroded. I would be one of those people. Still, if you can just hang in there, there are good deals to be had - unless inflation wipes out the restructuring of these markets. This is true in housing, it is true in stocks. Not true in bonds, which just are not a good investment right now. I admit it is tempting to try and hide one's money in commodities, but there is no way to shield your money from speculative forces. Jim Cramers rules are the best - if you want to buy something. make sure that something is what you really want. Don't sell short unless you need to do so, and you know it is the right thing to do.

So, is there no long-term effect, no hangover ? Well, I will not go that far. There will be winners and there will be losers from these "adjustments". Mostly, China is in the catbird seat. I see in the news today that the Russians, through the Canadian firm Magna, just sealed the deal for GM Europe aka Opel. Merkel needed to get this done so as not to expose German assets to the bigger raid on GM by the US government and the UAW, so this happened just in time - however there is risk that Opel jobs will be moving east to Russia; maybe some of the Turkish Gastarbeiter can move with the trade, but this is the best deal the Germans could get. VW is likewise embroiled in Eastern Europe - they invested all over the place, and now have a good bit of overcapacity and too many brands to worry about.

Anyway, back to the Keynesian front along Connecticut Avenue. Bernanke is out of runway. He cannot drop the discount rate without causing serious damage to the dollar, and to the US economy. Oil prices are rising, and it is clear that OPEC thinks it can now continue to fleece the golden goose without killing it. As far as the Treasury is concerned, I've never seen such a nightmare. In theory loose fiscal and loose monetary policy is the most stimulative possible policy - a real full court press. As is well known, it will take some time to burn down all this pork and it will not burn cleanly. Obama's policies on defense and the environment will result (at best) in structural unemployment and (at worst) create recessionary forces that cannot help slow the economy. Add health care restructuring to the mix and you have a real mess on your hands. These guys, even if some of their goals are laudatory, are off trying to do too much, too fast. So if you thought the Bush 43 administration had no sense of limits and boundaries, the Obama adminstration makes them look like pikers. Guys like Kudlow and Cramer are out there every day reporting what is happening to the markets, but the political reporters are rather - slow on the uptake. But even they cannot completely ignore what is happening, even if it is not in their range of expertise. It was fun watching Paul Krugman squirm on the Stepanapoulos panel today as all the other members gasped in horror at what is going down with GM. But this is serious stuff, and nothing you do is risk-proof, so:

I did find a hedge fund for all you doomsayers out there. They call it the "Black Swan" fund:

http://online.wsj.com/article/SB124380234786770027.html#mod=rss_whats_news_us

As for the rest of us...

Fac fortia et patere (Do brave deeds and endure)

Bill R.

Saturday, May 30, 2009

Email Sent to Ted Olson

Below is an email I sent to Ted Olson in response to a Reuter press article, entitled:

Bush v. Gore lawyers take on gay marriage ban

I am writing this email to express my very strong displeasure with your efforts to legalize same sex marriage nationwide. Many of us who have followed this issue closely recognize the 14th Amendment implications of unilateral state actions,
first within state courts and more recently within state legislatures, to change the state of the law on this matter. Indeed, my own support for the Federal Marriage Amendment and disagreement with those conservatives who take a high view of
state sovereignty is grounded in my own federalist convictions that, eventually, this issue will become a matter of national concern. That said, the very worst thing that possibly could happen would be for the Supreme Court to impose a decision on the nation at large on the basis of 14th Amendment arguments, or even full faith and credit. This has horrible consequences for both our nation and for the families and individuals impacted by such a decision.

First and foremost, it poses a real challenge to the legitimacy of the constitutional structure that is so very vital to our survival as a nation of free people. At the age of 55, I have seen this national drift farther and farther apart into a maze of party politics, ethnic strife, class warfare, and disintegrating families. While some argue, indeed some do not even bother to argue, that
such a loosening of civil society is the price of equality, and that the ends justify the means, I do not think it is questionable that there are limits to the ability of the courts to mete out fairness at will. The current controversy over Judge Sotomayor and Ricci v. DeStefano stands as an example of what happens when the courts exceed their proper sphere. (On this subject, I am not criticizing
Judge Sotomayor's position, only pointing out that the expansion of judicial power only leads to more litigation and increasingly complex cases.) As a federalist conservative who ranks Alexander Hamilton, Henry Clay and Theodore Roosevelt among his political heroes, I cannot abide the misutilization of the 14th Amendment to achieve a result that will inevitably degrade the public's respect for our form of
government, further demoralize our citizenry, and exhaust all branches and levels of government in the making, enforcing, and interpreting of laws that are increasingly unjust, unenforceable, and unintelligible.

Secondly, I believe that the advocates of same sex marriage ignore the practical consequences of its legalization. There are many areas where the state of the law with respect to inheritance rights, adoption, and child custody would be impacted by a Supreme Court ruling to legalize same sex marriage in all states. State law is in no way consistent across the nation in these areas, and I believe that a Supreme Court decision to legalize same sex marriage would throw the state of the law on these matters into massive disarray, in a way that would cause even greater inequity than would result from accepting the current rather unsatisfactory situation
in which state law differs on same sex marriage. There are also matters turning on church-state relations, since many of the Protestant churches are deeply divided on this subject, and a significant change in the state of civil law will deepen this schism, as well as impose inequities in cases where these churches remain divided within a single ecclesiastical structure.

As you may note, I do not find it appropriate here to argue this issue on grounds of morality or on a theory of natural law. But there is a tension that exists between an ethical position that defines morality as the will of the society as reflected in the opinion of the majority, and a moral view that makes good and evil to be independent of custom or tradition. My position as a federalist and a conservative is simply that if the state must make moral choices and ignores the opinions of the majority of its people, or even a substantial minority, it places its legitimacy at risk and inevitably is reduced to the rule of force rather than reason to uphold its sovereignty and the integrity of its laws.

Therefore, sir, I must confess the anger I feel towards you and the role you are playing, since I cannot believe that you have failed to think these matters through before choosing to act. These are very trying times in which we live as Americans today. We face many challenges to the integrity, freedom, prestige and well-being of our nation. We do not need this.

Regards,

William C. Riggs
Fredericksburg, VA

Wednesday, May 27, 2009

Considering Sonjia

One of the key challenges to being the loyal opposition is knowing when and where to pick your battles. There is a lot of useless, manipulative and contrived tabletalk going on these days that loosely corresponds to this problem, inasmuch as it affects the Republican Party. But I do have the ugly suspicion that we are getting spun...why else would Colin Powell come out of the woodwork and do a bellyflop on Limbaugh and Cheney, if he were not in some sense providing top cover for the Obama Administration. No matter...such "fifth column" tactics will cut no ice water among the 35-40% of Americans who remain strongly affiliated with the Republican Party.

Just looking at the first returns on the Sotomayor confirmation, there would appear to be much more smoke than fire out there. One immediate impression I have is that the Democrats seem to be doing a good bit to make these process more difficult than it needs to be. Here is a basically centrist judge, who was first put on the federal bench by George Bush the elder and than elevated to appelate judge by Bill Clinton. She actually ruled in favor of the Bush 43 adminstration policy on restricting foreign aid money so as not to support abortion. She has a very limited track record on controversial social issues. She started out her legal career as a prosecutor; while she's no John Roberts or Samuel Alito, she seems tough on crime, reasonably observant of legal precedent, not particularly inclined to activism from the bench, and a good example of good old GOP values: a rags-to-riches story of hard work and individual excellence. Morever, when she gets slammed by The New Republic for insufficient intellectualism and disrespected by Jonathan Turley for a “a lack of depth" in her legal opinions, one must sit up and take notice. Might this woman be somehow infected with common sense, of the kind that repels liberals ? What is not to like about all this ? Do we Republicans imagine that we're likely to get a better deal from this White House ? Is there profit to be had, or fools gold, in selling Sonjia Sotomayor short ?

Taking stock of thee situation, one is indeed tempting to follow Fred Grandy's advice...kick up a little dust. Go through the motions. Take a little time with this nominee, see if the Administration makes a mistake here and there - not an unlikely outcome, particularly with this accident-prone White House. Just seeing Mr. Gibbs twist in the wind on a sensitive issue like this is indeed worth the entertainment value.

So, what is the problem here...if this nomination is the one-time-good-deal it is alleged to be, why wait to get onboard. Why not sign onto the Sotomayor bandwagon and get this over quickly ? Both Clinton nominees, Ruth Bader Ginsburg and Stephen Breyer, sailed through the confirmation process with hardly a dissenting word from the then-majority Republicans in the Senate. One would think that this confirmation would be a slam dunk...and therein lies the problem.

For some reason, rather than giving the Senate Republicans the space to quietly consent to Sotomayor's nomination, along with the presumptively unanimous Senate Democrats, Sotomayors supporters seem bent on cramming the loyal opposition, as if their candidate was flawed or had something to hide. Why bother just winning when you can railroad this thing through ?

When it comes to demagogery and manipulation, one can always rely on Chuck Schumer, and he does not fail us here.

http://hotair.com/archives/2009/05/26/schumer-to-gop-oppose-sotomayor-at-your-peril

"I think Republicans oppose her at their peril..,in some sense this is a referendum on the future of the Republican Party...she's written some very strong tough-on-crime opinions."

Thanks for your input, Chuck. In this business. we call that leading with your chin.
If this candidate is so moderate, nay conservative, if she's as tough on crime as, say, Sam Alito - why would the "hard right" not like her more that the looney left ?

Barack Obama took a rather higher note in his nomination speech:

"Well, Sonia, what you've shown in your life is that it doesn't matter where you come from, what you look like or what challenges life throws your way, no dream is beyond reach in the United States of America."

"And when Sonia Sotomayor ascends those marble steps to assume her seat on the highest court in the land, America will have taken another important step toward realizing the ideal that is etched about its entrance: Equal justice under the law."

This is all very nice, and only a moron would not be touched by what is, after all, the very inspiring success story of an extraordinary woman. But Democrats only play these notes for their own. If they view "equal justice under the law" as "proportional representation of Hispanics in high office" - remember Michael Estrada ? Where was the equal treatment, where was the justice there ? Apparently, it is not necessary to act justly towards the "hard right".

I don't listen much to David Frum these days, but he does make an interesting point about Sonjia Sotomayor's persona:

http://www.newmajority.com/ShowScroll.aspx?ID=2f0218a8-be6c-4380-9a44-f533327c01d4

"Obnoxious, but in a good way", eh, David. Well, one expects obnoxiousness from New Yorkers, so there is no reason respond in kind. Rather than damn this woman with faint praise, feeding her already bloated ego - actually, since she is a long-time divorcee - this will be a first..she'll be the first cougar to make it onto the Supreme Court.

Ahh, be that as it may, my advice to Republicans is to ignore the Democrats. Don't take the bait, don't let them lure into the trap. Fred Grandy is right. Do like Brer Rabbit, scream and shout loudly to the Democrats, not to throw you into this briar patch. And then you just let this nomination go through, chalk up the win, and count your profits, boys.

Bill R.

Wednesday, May 13, 2009

Tweeting at Ruthie

I posted the following reply to this Ruth Gledhill article, on our usual obsession, which you can read here:

http://timescolumns.typepad.com/gledhill/2009/05/presbyterian-minister-in-antigay-nazi-sermon-rant.html

My reply:

I beg to differ. The United Methodist Church has maintained peace in the church by not giving ground on homosexuality. Yes, there are dissenters from that policy, and yes they are vocal, and yes, some of them are bishops. Nonetheless, those who think that one can gain peace and ecclesiatical survival by just lightening up and being nice - are demonstrably in error.

Wednesday, May 6, 2009

DR Show Watch - Unthinking About the Unthinkable

Liberal public radio talk show host Diane Rehm had one Joshua Cooper Ramo of Kissinger Associates on her show this morning, reviewing his recent book "The Age of the Unthinkable: Why the New World Disorder Constantly Surprises Us And What We Can Do About It ". Now, of course, it is antinomious to think about unthinkable things...among the antinomies that Mr. Ramo exposes in the interview is his rejection of the strategy of deterrence. Older readers might remember this quaint Cold War era concept - the idea that if one prepared to impose unacceptable consequences on one's adversary, that adversary could be dissuaded from taking actions unacceptable to oneself. This worked in a bipolar world, with the distressing proviso that both sides must prepare to annihilate each other, and barring that, be prepared to limit the stakes in any direct confrontation within certain "rules of the game". This was thinking about the unthinkable, circa 1965, and Mr. Ramo's boss Dr. Kissinger was one of the primary thinkers about these unthinkable things.

But the irony cuts a bit deeper - for Henry Kissinger was and remains the most successful exponent of Hans Morgenthau's realist school in international politics. In realist theory, the material cause is power, and efficient causation is rendered by the balancing of power. While realist theory does not have a very strong teleology, its systemic goal is the maximization of power for individual (state) actors, but an equilibrium of power for all actors. Now, such an equilibrium could be multipolar (as was the case in Europe for most of the 18th century), bipolar (under the conditions extant during the Cold War), or unipolar - the much overrated US "hegemony" following the downfall of the Soviet Union. The policy bias for Kissinger and those who have followed in his train, therefore, has been to favor whatever status quo exists at any given time...although realist theory does not quite require state actors to underwrite the status quo, actions by states that seek to overturn the status quo are regarded as suspect, destabilizing, dangerous - irrespective of their moral worth. It is not that deterrence, retaliation, all the methods of "hard power" are not worth the cost, are not ineffective...they are simply not enough. Adequate security against terrorism requires defensive measures, measures that can and do impinge on the life of civil society, as any air traveler will attest. As Frederick the Great said, "he who defends everything, defends nothing", so even here, strategic choices must be made, and achievable ends matched to affordable means.

Ramo turns realist theory on its head, citing the intended consequences of state actions, such as the War on Terror, and claiming his ideas to be based on chaos theory as applied to international politics. Thus, rather that a policy of deterrence - and certainly not preemption - Ramo recommends that the US learn to roll with the punches, to react more effectively to unforeseen events - such as 9/11, the global financial crisis, and swine flu. I have to say, that in my own thinking about how to deal with 9/11, I had similar thoughts. While I generally supported President Bush's actions abroad, I felt that the whole "Department of Homeland Security" effort was misguided, the creation of a bureaucratic monster rather than the adoption of a sensible set of long term measures, with a strategy to mitigate the threat of terrorism against targets that by their nature cannot be fully protected in all possible scenarios.

Problem: if one takes Ramo at his word, systemic change is not controllable, even though it is unpredictable. For in chaos theory, system dynamics are deterministic even though they appear to be random. This, by definition, is a problem for policy makers, especially in democratic governments in which the officials of the state are at least formally responsible to the citizens of the state. If a butterfly causes Hurricane Katrina, is it the President's fault that New Orleans is devastated ? Ramo's response to this problem is ambiguous. On the one hand, he wishes to see a radical restructuring of government and perhaps a rethinking of its role - to the point of creating a "Department of Resiliance". On the other hand, in his interview with Diane Rehm, he stated that resiliance is an attribute that individuals must acquire, and he went on to praise the importance of religious faith as a means of sustenance under adversity. What are public policy makers supposed to do with all this ?

Neither Bill Clinton nor George W. Bush nor Barack Obama could be fairly tagged as "realist" in their approach to foreign policy. Clinton and Obama campaigned on a platform of change rather than the status quo. George W. Bush's detractors attack his policies as being neither realistic nor morally acceptable in the idealistic tradition of Kant. It would not be unthinkable to posit the notion that the United States has adopted the role of Tsar Alexander's Russia, the "revolutionary" power in Kissinger's "A World Restored", in contrast to the balancing efforts of Castlereagh and Metternich, who Kissinger praises and exalts for having restored Europe's political equilibrium at the Congress of Vienna. Reasonable persons may indeed argue whether the United States has asserted its power to the point where it is not the butterfly that causes the hurricane by flapping its wings, but the giant gorrilla whose roar - what effect does it have ? Well, in chaos theory, it is virtually impossible to know, as first order effects evolve into second...third..nth order effects, whose true propagation is difficult, if not downright impossible, to estimate.

As a died-in-the-wool realist in international relations, I think one ought to give Mr. Ramo his due - for even in a strictly realist model, deterrence is not the only option for an autonomous and self-interested actor. However, one does gain the impression that Mr. Ramo, in concocting his - new ? - theory ? - has somewhat tossed the realist baby out with the idealist and constructivist bathwater. No doubt, a Carteresque foreign policy who primary feature is its inefficacy would not suffer the consequences of externalities caused by Yin resulting from executing the politics of Yang to their logical conclusion. But this is really just power politics on the cheap. Those who advocate "smart power" will need to invest more in the way of blood and treasure, to authenticate their investments at an acceptable level of risk. In this regard, Mr. Cramer's mad money rules are as worthy a strategic guide as Clausewitz's Principles of War.

I am not - quite - willing to leave the matter in this somewhat unsatisfactory state. The antithesis to Ramo is not, in my view, to be found in the writings of Kissinger or Morgenthau, but in a perhaps unexpected place - in the writings of another relic of the 20th century, Sir Karl Popper. For Popper's writings, particularly in "The Open Society and Its Enemies" (OSE) and "The Poverty of Historicism", attack determinism as such. Now, to a certain extent - and I am still exploring this question - Popper's complaint about historicism seems to be grounded in ideology, in the realm of preferred values, rather than fact. Like Ramo, Popper deals with change; Popper advocates change, demands change, does everything in his power to remove barriers to changes he regards as humanitarian, within the legitimation of Kant's authority. To a degree perhaps less clearly than Popper, Ramo also denies the universality of historical thought- deterrence was a fine paradigm during the Cold War period, not for today. In like manner does Popper reject the philosophies of Heraclitus and Plato: too static, too conservative, opposed to change. Unlike Ramo, Popper offers a middle way between revolutionary change and status quo conservatism. Given that the world is uncertain, our theories imperfect, and the consequences of our actions unpredictable, Popper offers an approach derived from Fabian Socialism - what he calls "piecemeal social engineering". Popper contrasts his approach to that of utopianism thus:

It is

"the difference between a reasonable method of improving the lot of man, and a method which, if really tried, may easily lead to an intolerable increase in human suffering. It is the difference between a method which can be applied at any moment, and a method whose advocacy may easily become a means of continually postponing action until a later date, when conditions are more favorable. And it is also the difference between the only method of improving matters which has so far been really successful, at any time, and in any place, and a method which, wherever it has been tried, has led only to the use of violence in place of reason, and if not to its own abandonment, at any rate to that of its original blueprint".

Now, perhaps Sir Karl was indeed being a bit polemical here, as he is found to be in many places in OSE. But what he advocates, despite its clear neoconservatice overtones, does strike me as being much more rational and humane and pragmatic than Ramo's recent accretion to the corpus of postmodern thought.