Archive for November, 2009
A little over a year ago, I had coffee with a friend of mine who had just returned from a trip to Dubai. Honestly, the place sounded like Atlantic City on steroids. A few blocks off the main drag, you were back to squat brick buildings, and the general poverty that has afflicted the place for generations. It had a booming tourist trade, and yes, you could buy a drink, but no particular reason to be a financial center, and thus no real economic reason for being so massive. At some level, every economic miracle involves salesmanship and exaggeration, but at heart, there has to be something to exaggerate, otherwise the whole enterprise really is folly.
Now, with Dubai looking a lot like Fannie and Freddie, only without the government bailout, we’ll see exactly how much of this was real, after all.
Still, even though this isn’t exactly sovereign debt, it has a lot of the characteristics of sovereign debt, especially in a place where there’s still not a whole lot of difference between the sovereign and the country. And it points out a real potential problem with the massive growth of sovereign debt, including state pension funds in this country – the concentration of decision-making, as opposed to its dispersion.
Markets work because buy and sell decisions are made by hundreds, thousands, even millions of actors. (The number of issues on trade is actually much less important. The early Dutch stock market worked remarkably well, despite there being only one stock to trade: the Dutch East India Company.) But state and national resources dwarf what any individual can put together. Decisions by a relatively few number of actors can now move not only individual stocks, but entire markets. The danger of both massive mispricing and actual manipulation should be obvious. Moreover, there may be times when, like any other investor, the fund wants to flee for the exits, and you can bet the rules will be rigged to make sure they can. And you can’t.
Of course, state actors will see this form of economic warfare as a failure. Much better to use the threat of such action to get what they want, by degrees. And since state actors are likely to see their investments in political, rather than financial or economic terms, the incentive exists to rig entire markets for the benefit of chosen domestic allies, or, in the case of overseas investments, a country’s given interest vis-a-vis the issues of the day.
None of this is good for markets or economies, which rely of economic decisions being made primarily for economic purposes, not political ones.
At least we don’t have New York’s or Connecticut’s problem. The New Jersey Nets and associated developers have apparently won the right to take someone else’s property for their own use. Yes, it has to pass through the hands of the State of New York first. But the State Supreme Court has rules that New York can declare Atlantic Yards blighted, pay off the owners at some price the state determines, and turn the land over to developers for a new arena for the New Jersey Nets, as part of a mixed-use commercial and residential development. (That prize of a franchise, by the way, has opened the season 0-153.)
Remarkably, the Court declared that this was an act of judicial restraint, arguing that it was bound by the definition of “blight,” which was completely under the control of the legislature. As with the property in Kelo, the development may not even go forward because of financing. Some parts of the project have already been delayed or canceled because of the economy. The bonds must be issued quickly in order to qualify for certain tax breaks. The article is silent on whether or not the property will be condemned and transferred before the necessary development bonds are issued.
I have no particular opinion on whether the development would be good or bad for Brooklyn. Certainly, it’s better to finance this sort of thing privately rather than publicly. The history of sports arenas and their surrounding neighborhoods is mixed, with football stadiums being about the worst, and shared basketball-hockey arenas doing the best. Coors Field helped revitalize Lodo here in Denver, and the MCI Center (now the Verizon Center) has been a boon for a truly blighted area, downtown Washington, DC.
What’s at issue here is the sanctity of personal property. Aside from the ideological obscenity of taking your property to give it to someone else for their financial benefit, there’s the overall legal and investment environment that’s created when people don’t really own property that they believe they own. That sort of uncertainty has got to limit people’s willingness to invest in their land. And of course, it almost always results in a transfer of property from the less-well-connected to favored groups.
One footnote: this is the same property that the City of New York, in the person of Robert Moses, refused to use eminent domain for in order to build a new stadium for the Dodgers.
For a long time, we’ve been hearing about how the housing market in Colorado isn’t as bad as in the rest of the country, and there’s some truth to it. We’re routinely at or near the top of the Case-Shiller index, and foreclosures have tended to lag behind the rest of the country. But there may be some serious trouble on the horizon. According to a study in yesterday’s Wall Street Journal, almost 25% of US mortgages are underwater. That’s not 25% of homeowners, since those without mortgages by definition aren’t underwater, but it’s still a pretty serious number.
Colorado does not fare particularly well in this survey. While the national average is 23%, 19% of Colorado mortgages are underwater, good for 11th in the country. An additional 7.8% of Colorado’s mortgages are with 5% of being underwater, 2nd-worst in the country. With a loan-to-value ratio of 72%, Colorado is 9th-worst in the country. (The worst in that category is Harry Reid’s own Nevada with a staggering 114% loan-to-value ratio, 23 percentage points worse than 2nd-place Arizona.)
So obviously, Gov. Ritter, the legislature, and the state Supreme Court thing that the right thing to do is to raise property taxes on these homeowners who are already going to have cash flow problems.
This afternoon, I had a chance to tour the YMCA’s Youth In Government program in action. This week is their annual mock state government here in Denver, and none other than the Governor himself, Dalton Curry, showed me around. Rep. Ellen Roberts had mentioned her support of the program when we interviewed her on the RMA’s Blog Talk Radio show. The students model the whole legislative process, from committee work to floor sessions, with a Supreme Court to rule on Constitutionality. From what I heard and saw, they took it pretty seriously, from drafting bills to the floor debate. They get to meet in the actual committee rooms, the actual Senate and House chambers, and the Supreme Court meets in the Old Supreme Court Chambers.
At the end of the session, the delegates elect the officers for the following year, including the governor and lt. governor, which makes it more of a parliamentary system, I suppose.
Back in high school, when I still thought the UN was worth something, I participated in the Model UN program. This seems to be a more worth endeavor.
Some of you may remember the fake Mickey Mouse that Hamas was using to indoctrinate children. At the beginning of Part 2, Mr. Marcus takes up the tale of that TV show, and the way it’s still being used to create a visceral hatred of the Jews.
Although he didn’t mention the source, Mr. Marcus cited a recent survey showing a Palestinian preference for religion law over that made by their own legislature. Given the more religious drift in Palestinian society, that Hamas was more effective in social networking venues than Fatah, but PMW doesn’t walk back the cat from social networking sites, so Mr. Marcus was unable to confirm this suspicion. In fact, many of the messages that Palestinian children are now receiving cast the war against Israel and the Jews in explicitly religious terms.
In correcting my mistake that the PA had been using Saudi-funded schoolbooks, Mr. Marcus pointed out that their funding had come from the West, and their content was domestically-created. A couple of years ago, PMW unveiled a report on those schoolbooks, and then-Senator Clinton condemned those books as, “poison.” Now-Secretary of State Clinton, and the administration she serves, are undeterred by their dismay with the most recent schoolbooks. Apparently, we can’t let extremists derail the “peace” “process,” even when those extremists are our negotiating partners.
In Part 3, he discusses a troubling trend within Israeli Arabic media, brought to the fore in its coverage of Operation Cast Lead.
At the end of the interview, Mr. Marcus dissects how Palestinian libels against Israel gain traction, from their inception, through their embellishment and eventual entrance into mainstream dialog.
The sound on the YouTube video is a little tinny, but I’m working on getting a better version up soon.
So I thought, for just a moment, that I had figured out just how Colorado’s Congressional delegation got expanded to upwards of 64 districts. There are two parts to the report – who got the contract and where the work will actually be done. So for this contract, the work is done at Ft. Drum, NY’s CD-23. And here, there’s no Congressional District at all, I suppose. But, alas, it turns out that Colorado’s 23rd Congressional District isn’t mentioned at all on the list, so that can’t be it. It would have made sense, them confusing our Bill Owens for their Bill Owens, but no.
And about that $912 that the Teller County School District received, that was apparently part of a larger, $10,037 grant. The $912 was for infrastructure, but the project description mentions none of that:
No jobs were created. Funding is being used to assist current employees in obtainining credentialing and improving educational background. Employees are also being trained to communicate with two Hispanic families moving into the area.
So no jobs were created. Current employees are getting to go to enrichment programs, which I’m sure will no doubt raise their market value when they decide to move, and someday may help their young charges do better at school, but hardly counts as “stimulative.” Likewise the Rosetta Stone software they’re getting for the new families moving in. No reason at all to use the money teaching those families English, which is of far greater economic value in an English-speaking country, one would think.
Ah, the Stimulus, the gift that keeps on giving, although not quite in the way it was advertised. Go look at the lists yourself! It’s hours of good, clean fun!
That’s right. At the bargain price of just of $1 million, the Federal Government has created or saved 14 jobs in CD-30. Of course, the additional 14 jobs created in CD-64 came for only $33,000. Of course, the folks down in Greenwood Village, who saw 650 jobs created, at a net loss of $111 million to that zip code, are positively steaming with jealousy. And I’m sure that the New Energy Economy will benefit from the loss of $60 million locally by the National Science Foundation. And, Teller County Schools, don’t spend all $912 in one place. Yeah, I’m talkin’ to you, Michelle.
Of course, we know this is all true, since Governor Ritter has signed a Statement of Transparency stating that he intends to ask for and spend the Stimulus money involved.
According to the Wall Street Journal, President Obama in China argued in favor of Internet freedom, with arguments that should apply to all First Amendment freedoms:
Speaking to a selected group of Chinese students at the beginning of his first visit to China, Mr. Obama said that the free flow of information makes societies stronger and holds political leaders accountable. People in positions of power may bristle at criticism, he said, but open criticism “makes our democracy stronger, and it makes me a better leader because it forces me to hear opinions that I don’t want to hear.”
Mr. Obama’s words, however, likely reached few Chinese. In contrast to visits by his two predecessors, Bill Clinton and George W. Bush, Mr. Obama’s talk was not broadcast live on national television.
The Chinese typically respond to criticisms with charges of hypocrisy, and while I’m unsympathetic to them on that account, Americans might do well to pay attention to the charges this time. Consider that this President has:
- Proposed that the rest of the world adopt pre-emptive “notice and termination” rules for Internet content, and done so in a secret clause in a new international copyright treaty
- Used the bully pulpit to browbeat press critics, including Fox News, Rick Santelli, and others
- Shielded official political advisers from press scrutiny by appointing them as unvetted “czars”
- Proposed that citizens inform the White House of fishy “opinions I don’t want to hear” regarding health care
- Hinted broadly about “hitting back twice as hard” against administration critics
- Repeatedly told those critics to stop talking and that “the time for debate is over” – at the beginning of the legislative process
- Has first supported, now appears to be backing off, a UN resolution pushed by the Islamic Conference banning “blasphemy”
- Has appointed a “Diversity Czar” who openly admires Hugo Chavez’s approach to the media and wants to bring racial politics to the FCC
Administration apologists will argue that such examples only prove the President’s point – that a free press circumscribes presidential power. But even if that were his point – and I don’t think it was – it’s not as though the President has been supportive of such a press. Instead, he and his administration see it as an evil that needs to be suffered through and circumscribed, not a positive good.
As usual, universal principles are really about how they affect Obama: they make him hear opinions he doesn’t want to hear. That, of course, is only part of the value of a free press. The people have the right to petition the government, which would produce the same effect. Indeed, the open comment period that most federal bureaucracies have during their rule-making process produces the same effect, but it’s hardly the core of the First Amendment. Monarchies and autocracies throughout history have had mechanisms for wise rulers to take the temperature of their subjects and their various interest groups when forming policy.
No, freedom of speech is about letting people communicate with each other. It’s about organizing opposition and support in a pluralistic society, with a separation of powers and a federal system. It’s a key part of the process of self-government, where citizens debate each other about issues and policies and principles. And while it’s certainly a part of our elected leaders’ exercise of power, it’s much more often a check and a limitation on that power.
The President of a free people should know better.
UPDATE: Of course, I should have known better than to forget the process by which Congress has passed multi-thousand-page bills this year, in virtual secrecy, without decent public review of their content, and that in direct contravention to promised transparency. Free and open debate works best when it disseminates actual information, something that the Democratic Congressional leadership has striven mightily to prevent.
So with the move to digital, we’re putting the stereo up for sale. It’s a Fisher Studio-Standard system from 1987, and it’s completely intact and in working condition. It includes all the manuals (as though you would need them), and the rack, although the glass door is missing.
- CD Changer
- Tape Deck
As always, click to enlarge.