444 Days

My parents saved everything. They were Depression era kids. Growing up nobody really had much of anything and if you did have something, by God, you would never throw it away even long after it became useless, because "you never know." On top of that my dad was a history buff, so he saved alot of historical arcana. So my mom calls me up the other day, tells me she's been cleaning out some of dad's stuff and asks if I want his collection of political memorabilia. "What's in there?" I ask. "Alot of buttons", she tells me. "Let's see, there's 'I Like Ike', 'Vote AuH2O', 'All the Way with Adlai', 'Fuck Iran', and 'Ayatollah Ass-a-hollah'.

Whoa! That jolted me back. Back to December of 1979 precisely. My parents hosted a Christmas dinner party every year and invited all of dad's high school buddies and their spouses. The Iranian Hostage Crisis was the talk of the day and one of dad's more irreverent friends, brought the 'Fuck Iran' and 'Ayatollah Ass-a-hollah' buttons to pass out. Needless to say, none of the lawyers, doctors, bankers or any of the three Jesuit priests in attendence donned the buttons, but as a kid I was captivated. 'Wow, curse words on a button,' I must have thought. Turns out these weren't obscure novelty items. If you walked down the street of any touristy part of Manhattan that Christmas season, you would likely pass several places (or people) selling them. Back then we seemed to understand that Khomeini & Co. were nut cases and deserving of our scorn and vigilence. It was OK. Clearly that is not the case now. Khomeini's proteges are building nuclear bombs, joking about the Holocaust and threatening to wipe another country off the map and the American public seems somewhere between not caring and skeptical of not them, but us! Perhaps the intervening years have dulled us, after all Iran has for the most part been off our radar screen for 20+ years. Our short attention spans don't help either. On the scale of history, the Iranian Hostage Crisis was basically yesterday and nothing has changed, but we don't see it.

Those buttons got me interested in what was going on, and as a kid, I asked the type of questions you would expect of a kid - simple, unburdened by nuance, perhaps inane to an adult yet clumsily trenchant. "Dad, why has the President let those people be held hostage for so long?" I don't know, son. "Dad, will our new President, the actor guy, help those people get free?" I don't know but I think so, and I hope so, son.

444 days. It was my first lesson in foreign affairs. One type of leader let it go on for 444 days. Would the other type of leader have let it go on that long? We'll never truly know, but history has given us about as close to certainty as we'll get - it was unlikely the cowboy actor guy would have let the situation persist.

So, will Iran get the bomb? I don't know, but I hope not. I would be more optimistic if I saw more of those buttons floating around the kiosks and street vendors in NYC these days.

Peak Oilers Back in the Sun After All These Years

The Peak Oil theory is undergoing a renaissance of late, as is usually the case when oil prices are high. Bloomberg adds some oomph to the resurgence of this declinist doctrine by showing that the investment world is buying in. Bloomberg Markets magazine has a long article in the October '06 issue (short version here) that, among other things, dusts off Colin Campbell, a high priest of the Peak Oil sect. Despite Campbell's spotty track record, he now has big money disciples like T. Boone Pickens and Eric Sprott. Also to point, the current rock star of the Peak Oil movement is not a geologist at all, but an investment banker, Matthew Simmons, whose "Twilight in the Desert" is the "Silent Spring" of modern Peak Oildom.

Peak Oil is a second cousin of global warming. It shares a declinist perspective and it exists to heap scorn on the endeavors of humankind. What it also shares is the belligerent insistence that it is the consensus view and that dissenting views are ridiculous, heretical and/or sinister machinations. It simply is not accepted amongst right thinking people that Peak Oil could be wrong. It would be so terribly gauche to wax skeptical of Peak Oil at a Manhattan dinner party (and a good way not to get invited back).

There are good (science-based) reasons to be skeptical of Peak Oil, but if you ask me one of the most compelling reasons is the precise development that the Bloomberg piece highlights - money men signing on. When a scarce commodity theory takes such a hold on the investment community and becomes such entrenched conventional wisdom, hold onto your money and/or run the other way. Provided with the polish and gloss of a respectable theory, commodity bull markets turn into manias, but the end result is fairly predictable - the theory breaks down and the mania comes crashing down. High oil prices will correct high oil prices. Ignore Peak Oil as an investment strategy and a policy guidepost.

Dust Bowl Nostalgia

Why do reporters pine away for misery?

This has to be read to be believed...

...the NYT reefers a big piece on arid conditions in the Great Plains, which have left "farmers and ranchers with conditions that they compare to those of the Dust Bowl of the 1930's." It's the worst drought since … well, maybe 2003, "an extremely dry summer that … brought back memories of the 1930's Dust Bowl" (NYT, Sept. 5, 2003). Or maybe 2002, when "farmers shrug[ed] and wonder[ed] if a new Dust Bowl [would] soon be upon them" (NYT, May 3, 2002). Or 1998: "a dry spell that officials say shows signs of developing into the costliest and most devastating the region has seen since the Dust Bowl years" (NYT, Aug. 12, 1998). Or 1996: "Coming after two years of low rainfall and a number of other weather problems, the ferocity of this year's drought has slowly begun to evoke memories for some here of the Depression-era Dust Bowl" (NYT, May 20, 1996). Or 1988: "Since the spring's dry weather evolved into the worst drought since the Dust Bowl, the farm policy has been turned upside down" (NYT, July 10, 1988). Or 1982: "And when the winds come, turning the sky dark with dust and burying fence rows under shifting dunes of soil and thistle, those who are old enough remember the bleak days of the Dust Bowl." (NYT, May 14, 1982). Or 1980: "Is the nation in for a new Dust Bowl or at least a succession of scorching summers?" (NYT, July 17, 1980).

Major HT: Don Luskin

Ted Stevens Outed As Foe of Gov't Transparency

Maybe not quite "you heard it here first," but you did hear it here almost a year ago.

We Have Always Been At War With Eastasia

This is the most depressing exposure of Orwellian nonsense that I have read in some time.

The Economy and People's Perceptions Of It

A while back I touched on the strange phenomenon of broad-based pessimism on the state of the economy despite substantial evidence that the economy is somewhere between 'doing fine" and 'rocking'. Well, here is a further examination of the phenomenon that is interesting.

Struggling for Wisdom in the Census Data

The recently released census data on income and poverty is, naturally, the source of much commentary. Don Luskin finds an interesting (OK, sadly jejune really) comparison of treatments in the media.

Of all the commentary though, you need look no further than this. As Don Boudreaux's thought experiment reveals, it is silly to focus solely how much money people have when evaluating how much better off we are. How much money is a good starting point, what we are able to do with that money transforms the analysis into wisdom. I too would much rather have 1967's median income in today's world than today's median income in 1967. The range of human achievement that I can select from for purchases to better my life is vastly better, both broader and deeper, than 40 years ago. Heck, even 10 years ago. We're better off, no question.

The Sound of Silence

will be gas prices falling. If this comes to pass, it is unlikely that you will hear alot from the MSM about it. You certainly will not hear a repudiation of all the conspiratorial theories that greedy oil companies were gouging us (after all why would they stop gouging if they were capable of doing so in the first place?). The likes of Bill O'Reilly will not declare that oil companies have decided to become less greedy and are now giving us a benevolent break.

The US Economy Is Like the Yankees

By reasonable standards the Yanks are performing quite well, with a 7 game lead in the AL East after the 5 game sweep/thumping over the Red Sox. Not everything with the Bombers is optimal and the future is always uncertain, but there seems to be just as much cause for optimism as for pessimism. I am hearing nothing about what a bust the Big Unit is or how awful A-Rod is relative to his pay. However, for every disappointing outing by Randy Johnson or error by A-Rod, there seems to be some unlikely productivity out of an upstart Melky Cabrera or an aged Bernie Williams. Such is the US economy. It is on top and has been performing quite nicely for while. Employment and consumer spending has held up despite all predictions to the contrary. Productivity is doing OK to good. Capital spending is booming, as are industrial production and corporate profits (today's corporate profits are tomorrow's wages and pension payments). Broadly speaking a heartening picture, but what do we hear about? Gas prices and the slowly imploding housing market. These things are the A-Rod and Big Unit of the economy. Sure we pay these guys tons of money and they aren't producing to expectations. Disappointing. Fine. So what? Is it their current performance prima facie evidence that they will never perform optimally again? Does their performance jeopardize the entire franchise? Are the Yanks a lost cause by virtue of A-Rod hitting .279 or Johnson having won just 14 games? The evidence would suggest not. Analagously, will $3.00 gas send us into 1930s style depression? Are we to believe that without cash-out home equity refinancing Americans won't be able to buy back-to-school supplies for the kiddies? The broad picture would not lead us to this conclusion. But everybody loves to hate the Yankees, loves to bash those big contracts that the Boss doles out. And the MSM just loves to hate the economy, loves to bash those tax cuts that are a spur to savings, work and investment.

The Yanks are headed for the postseason, likely the ALCS and perhaps the October classic, and the economy likewise will turn in yet another boring, solid, merely excellent Q3 and Q4.

Germany's Brain Drain

This article details the brain drain hitting Germany, a phenomenon that is prevalent in many European countries and around the globe due to the strangling of economic vitality. The article seems to attempt to pin some of the hopelessness on Angie Merkel's government, but while she has clearly disappointed by backtracking on early, positive sounding rhetoric, Germany's problems have been a long time in the making over successive governments. Sadly, Germany is now in an unenviable spot, where dependency on the state in so entrenched that it represents a political hurdle too high to dislodge. Half the country wants reform to restore economic vitality, which would be painful to the other half that wants to preserve and expand its cushy state-supported existence, and so there is a political deadlock.

Places like the US and the other countries mentioned in the article benefit from the brain drain that afflicts Germany, France and other nations, scoring a win for Smithian capitalism over statism, but still, it is a little hard to relish this gain against the backdrop of hopelessness in formerly dynamic places like Germany.

Barbarians Buying Their Way Past the Gates?

According to this Bloomberg article, Russia has bought a stake in EADS, the parent of Airbus, and is seeking a management role. This is not a good development for Airbus and for commercial aviation in general. Airbus is already an overly statist institution that sometimes seems more like a European jobs program that happens to build planes than a serious commercial aviation enterprise. Adding in Russia, an emerging heavyweight of the new and improved centrally planned, statist economic model, will take Airbus in the wrong direction. Europe is a positively Smithian freewheeling capitalist heaven in comparison to Vlad Putin's Russia. If Russia exerts a management role in Airbus, it will be to redirect jobs and patronage to its dying aviation industry. Russia is already trying to merge its collection of aviation also-rans - Ilyushin, Tupolev, and Sukhoi - into a state-run monopoly called UAC. There is no doubt that with a stronger influence on EADS the Russian government would aim to work this dinosaur into the Airbus complex. Though without any decent technology and/or manufacturing prowess, I am not sure that Russian assets would bring anything at all to the table for Airbus except Russian government meddling in what is already a troubled institution.

Too Busy Being Green, Part 3

Gas prices are high because of alot of obvious and understandable phenomena, none of which can really be laid at the feet of this administration, but most of which can be laid at the feet of the political class in general stretching back decades.

One of the reasons is that oil companies, which should be maintaining the supply infrastructure, are too busy running annoying, puerile, and guilt-ridden TV commercials. Previous here and here. After having a refinery blow up in TX and their Alaskan operations hampered by pipe corrosion, BP has now fumbled again. BP now stands for Bungling Petroleum.

Dec. 3rd - Bush vs Gore. Really.

Crazed, conspiratorial, "selected not elected" wackadoos will get their chance to relive their Waterloo on December 3rd of this year. It's Bush vs. Gore. If you ask me, the fix is already in, after all, the new NFL Commissioner's father was a Rethuglican Senator. C'mon, isn't it obvious? In the coming spring semester, University of Wisconsin-Madison students will be able to take a seminar on the Saints' last minute win on that controversial overturned penalty.

I'll Join the Club

A while back I expressed no desire to be in one of Greg Mankiw's clubs, but it turns out I am headed for membership in another club in which he is also a member, the Serial Procreator's Club.

Shameless self-promoter that he is, Prof. Mankiw puts forward his own defense of his putatively socially misbegotten behavior. And a fine defense it is. Nonetheless the gold standard of Mankiw's general argument (and I was surpised he didn't mention it) is this.

Or, if you are one of those people who are inclined to think that many of the world's mysteries have been easily decoded and summed up for us in the form of quotations from a certain former British politician, there is this.

It Is Time for South Africa to Pay Us Back

SASOL, the South African oil company, is a pioneer in gas-to-liquids technology, which is short hand for the ability to turn coal into automobile fuel. Now, the industrialized West is clamoring for technologies that could reduce our reliance on petroleum, particularly foreign petroluem, so you would think we'd be jumping all over this technology. We're not, and the reasons why are for another post. Nonetheless, also consider that the West is nervous over the apocalyptic, radical Islamist, soon-to-be nuclear state of Iran, whose key economic weakness is their lack of internal gasoline refining capacity despite their abundance of crude oil. A lack of gas production is the single most important non-military lever we would have in any coming confrontation with Iran. So, who does it look like will be getting in on this wizbang South African fuel technology? Yup, Iran.

Would it be that hard for the US and Europe, who are seeing diplomatic solutions to the building Iran crisis falter, to open the pocketbook and outbid the Iranians? I mean, couldn't we give the South Africans as many fat contracts for GTL plants they want, just so long as they don't do business with Iran?

Moreover, I don't recall Iran being at the leading edge of the Anti-Apartheid movement either. The West needs to call in a chit with Mbeki and Company, and we need to do it now.

Does Iran Have Pocket Aces?

I agree with Michael Totten who sums it up about as best as can be done:
"War is coming again, and it’s coming like Christmas."

As I stated in part two of my thoughts on the "victory" for Hezbollah, the Israeli citizenry wants the gloves to come off. No namby-pamby, PR-sensitive, hyper Geneva Convention (this doesn't help), short window of opportunity type of war. They want Hezbollah wiped out and if they have to pave over southern Lebanon, so be it. Israelis have given Lebanon, and its internationalist cheerleaders, one last chance to decide if Lebanon wants to be Lebanon or if it wants to be Iran. Unfortunately, I don't think Lebanon has much power to make a firm choice, the cancer might have spread too far.

It is unlikely that Israeli leadership will act with half measures when they are compelled to act again, the only open question is the threshold of their tolerance going forward. The lack of will was the yawning gap this time around, not bullets or bombs. With that gap corrected, I would be reluctant to provoke the Israelis again given their firepower advantage. Beyond that though, Israelis have a strong culture of applied mathematics and economic theorizing. I would give them the strategic advantage in using tools like game theory and situational planning in the battles to come. Perhaps I am just an ignorant, ethnocentric American but I don't see alot of evidence that Hezbollah or the Iranian military establishment are heavy proponents of game theory and advanced situational warfare. Historically, militant fervor driven mainly by religious zeal tends not to be long on the scientific approach to war, so this hypothesis would seem a reasonable starting point. Indeed, we can see that Hezbollah and the Arab world continually focus on the intangible and symbolic in proclaiming victory and arousing enhanced popular support against Israel and the West. I just don't think the Arab world has the culture and the resources to focus on sophisticated war-gaming and planning; their expertise, it seems, is limited to populism and arming themselves. (I could be wrong of course, so I'd love to hear from anyone more in the know than I about how, say, the Iranian military actually functions.)

And as I said, I think that this Israeli "core competancy", so to speak, is likely in full swing now, so in the long run this little foray on the part of Iran/Syria/Hezbollah would not appear to be a brilliant long term strategic move, unless they have the military/strategic equivalent of pocket aces.

Bottom line: If Iran/Hezbollah were to provoke again, they are likely to meet a different response altogether, and to preserve the all-important symbolism and avoid losing face across the Arab world, Iran and its proxies would have to bring much more punch to the battle. We are in dangerous times indeed. I am devoutly pessimistic.

All Right !! We Won !! Part 2

Here is an articulate take on something that has puzzled me. Despite the media's desire not to cover this to any extent, the world now knows for certain that Iran can and does supply advanced weapons systems, personnel and training to a terrorist group. As Pollak states, Iran has made Bush's argument for him and beyond that Israeli and US military planners can now study the weapons and tactics and adapt. While it is unlikely that Iran has tipped its whole hand and has some higher octane weapons that it purposefully didn't show to Israel via Hezbollah, exposing part of the puzzle just lets western analysts remove that much more uncertainty and make better speculations as to the upper bound of Iran's military capability.

Furthermore, the Israeli people are excoriating the Olmert government for not knowing how to take the gloves off. The voters may not even give Olmert a chance to learn his lesson, but you can be sure that he has learned it. The UN sponsored cease-fire is quickly becoming a joke - with delightful international stereotypes playing out true to form, like the French offering only 200 troops but offering to lead the whole shabang.

So the world now has definitive proof that an unbalanced state, Iran, is arming and goading a lethal terrorist group while proclaiming its pursuit of nuclear technology is for peaceful purposes. Iran has let its enemies peak at many of the conventional weapons that are likely to be used in any future confrontation, and it has stiffened the spine of the Israeli public for round two (maybe even the American spine despite the caterwauling you hear in the media). Less obvious are some of the secondary actions this is episode is likely to prompt. You can bet that Bush will fill up the Strategic Petroleum Reserve to its brim and very likely authorize an increase in its capacity to counter the "oil weapon." The West is likely to have serious discussions with Russia and China about what exactly is getting into the hands of the Iranians. Mossad is likely going into overdrive to fill the gaps of its intelligence. Israeli engineers are likely already working on modifications to their tanks to harden them against Iranian anti-tank missiles. And a thousand other things. This is a victory?

More Fauxtography?

The first thing I said when I saw this photo was "Fake." Although I was referring the boobs.

Bruno Kirby, RIP

God Speed, Sir.

A few memorable tidbits of enjoyment:

"Mr. Zero knew?"

"No, I'm a writer and I know dialogue. That is particularly harsh."

"Baby Fish Mouth!"

"I also wrote 'pesto is the quiche of the eighties.' "

Hamilton Foresaw Castro, Chavez, Mugabe et al.

Despite having co-written the Federalist Papers, Alexander Hamilton was oddly reviled as a pawn of Britain and the key mover in a "monarchical party" that would undo the gains of the American Revolution while acting as our first Treasury Secretary.

For Hamilton, who knew the real path to tyranny, this was almost funny. Had he wanted to impose monarchy upon America he said he "...would mount the hobbyhorse of popularity, I would cry out usurpation, danger to liberty etc. etc. I would endeavor to prostrate the national government, raise a ferment, and then ride in the whirlwind and direct the storm."

Clearly he read Burke who said that "men do not readily relinquish their freedoms except under some grand illusion."

Unfortunately there has not been enough Hamilton or Burke studied in places like Venezuela or Zimbabwe. Even worse, I'm afraid there has not been enough Hamilton or Burke studied in places like the United States of America.

Siegel vs. Bogle Properly Understood

Over at one of the best economics blogs in the blogosphere, the estimable Prof. Greg Mankiw tackles the interesting subject of the emergence of new ideas about passive investing that focus on new approaches to the construction of indexes. Unfortunately, the brilliant Dr. Mankiw makes a hash of it, which I think is a typical result given that most economists of his stature do not make a serious study of capital markets and are far from experts on investing.

There are many problems with GM's analysis but the fundamental one is that he conflates Siegel's rethinking of index construction with a repudiation of passive management as a preferable alternative to active mangement. I think Siegel's "revolution" is quite clearly confined to index construction methodology:

"..traditional indexes will make way for fundamental indexing, which constructs indexes based on measures like companies that pay dividends, rather than just company size."

I don't see much abandonment of the passive philosophy in that. Clearly Siegel thinks that the market can be inefficient at times and in places and he is in very good company. I don't know of even the most ardent Graham & Dodd disciple that completely rejects Efficient Market Hypothesis. Acknowledging the theory's holes is hardly radical and consistent with the empirical evidence - some active managers consistently outperform passive benchmarks. This is where Mankiw makes the fatal mistake. He states: "By contrast Siegel thinks markets are inefficient. But if that is so, why not advocate active money management? The answer is that active money management has not done as well as passive management. But that fact seems to undermine the basic premise of the funds that Seigel is promoting."

No. The entire body of John Bogle's work, and simpatico work by Malkiel and even Swensen himself, lay the blame of active management's inferiority squarely at the feet of the frictional costs and the profits of financial intermediaries such as brokerages and mutual fund companies. Their basic premise has never been that active managers generate worse returns by virtue of their security selection, but that they are mathematically doomed to underperformance after all the frictional costs like bid/ask spreads, commissions, tax inefficiencies and their own profits have been factored in. It does not follow that if you believe the market to have inefficienies, that you must accept these handicaps. Not surprisingly that is not what Siegel advocates, rather he is taking aim at the concept of capitalization weighting and not passive management itself. He is not proclaiming a soon-to-be-revealed secret rule that will beat active managers, but a different approach to indexing which, presumably, preserves its advantage by avoiding frictional costs, but that corrects some of the investment illogic inherent in the capitalization weighting methodology. It makes perfect investing sense to correct for inherent biases that lead one to buy more of what is expensive and less of what is cheap.

That's the core of my criticism of Mankiw's analysis, but I also take issue with the notion that Bogle's view is superior because it has an economic theory behind it. Are we to suppose that our current pantheon of economic theories are sufficient to explain our universe and we should be skeptical of anything which isn't backed by accepted economic theory? I surely hope not. EMH is a very good theory, but yet we know that value stocks outperform growth stocks, so why are the views of Ben Graham not elevated to the state of an economic theory rather than merely the guiding principal of countless practioners? Perhaps the very simple concept of buying an asset for less than its intrinsic value at a reasonable margin of safety should be deemed an economic theory. Surely its historical record of huing to theoretical expectations while still exhibiting some flaws is no less worthy than EMH of the title "economic theory." Actually, scratch that thought. Perhaps it is because value investing is not an accepted economic theory that enables people to employ it become, gee I don't know, the second richest person the USA.

Disclosure: the author makes his living as an active money manager and his clients are some of the most sophisticated and informed investors around. Despite knowing full-well about Efficient Market Theory, they, and numerous others like them, pay good money to avail themselves of active money management services. If they saw no value in it, they wouldn't pay for it and the author would be out of a job. As it is, there is value to certain active management approaches and the author likes it that way!!

All Right!! We Won!!

Clearly Isreal did not come out of this affair any better off. Nonetheless is it not a true testament to the willful blindness that the human mind is capable of when driven by hate or overzealous belief that any Lebanese can look at scenes like that in the picture and view it as a victory at all? Is this devastation an acceptable price to pay to kill, what, a few dozen IDF soldiers and Israeli citizens? The tangible results seem damn paltry, just minimal death and destruction born by the Israelis. The intangible results - prestige, stature - seem to have more value. Still, in toto it wouldn't appear to add up to all that much, except when you realize that these gains came at little cost for certain parties. Hezbollah got to free ride on the whole of Lebanon, they wrote the check that could only be cashed by all the citizens of Lebanon. Not just the tangible assets of civic infrastructure but the intangible stock of promise and opportunity for a brighter future have been wiped out. Highly concentrated gains (Hezbollah) and diffuse costs (Lebanon), just like we have here with interest groups vying for tax dollars and other economic rents, except the stakes are much larger and much more serious, literally life and death. If you think our politics is nasty as we fight over things like pension funding, social security and healthcare, the aftermath of this war within Lebanon will be a shocker. I'm afraid the bloodshed to come in Lebanon among the Lebanese will be much worse than the war with Israel.

My Issue Hasn't Come but I Feel Like I've Read It

Karol Sheinin of Alarming News, prompted by the release of Oliver Stone's World Trade Center, puts forth some feelings on 9-11 that are generally simpatico with my views (although everyone who experienced that day here in NYC has a deeply personal and richly textured view that is trivialized by generalization).

I'm not going to get into that but what struck me is the silly cover article in the upcoming New York magazine that she mentions. It hasn't come in the mail yet, but I feel like I've already received it and read it, because said magazine has become about one of the most predictable, and predictably jejune, fonts of NewYorkism. This is to say that, except for the merciful issues devoted to things like the best doctors or restaurants, you can rely on New York to offer up a beyond comical paean to the dysfunction, silliness and proud moral bankruptcy that defines elite New York City. A couple of months ago was the cover article that let us peak into the perfectly normal polyglot sexual existence (homo-trans/cross gender-sexual erotic everything, these kids are into it) of the typical NYC teenager. Then recently the cover attacking motherhood, depicting the seemingly perfect mother who, in her secret reveries, hates her husband and laments childbearing. Yes indeed, all 40-ish women in NYC really wish they could be like Miranda of Sex in the City. And now the "What If 9-11 Never Happened Issue." No, not that 3000 of our fathers, mothers, brothers, sisters, friends, wives, husbands, etc would be with us today and we wouldn't have suffered the deep national wound of being attacked by a mortal enemy. No, Al Gore would be President and we wouldn't have the Patriot Act! Yippee.

Preseason Off to Fun Start

I gotta admit I don't get too hyped up during the pre-season, but I did enjoy watching a 285 lbs. quarterback lead a last minute, game-winning drive. Huzzahs all around for the Hefty Lefty, Jared Lorenzen.

We Have Confirmation

It was Krugman last week to declare a recession.

Now it is Stephen Roach (I thought he was optimistic cause the IMF was on the job...?) predicting gloom.

This is a confirmation of the Krugman Buy Signal. Buy Stocks.

"The Soy Lattes Won"

With few exceptions (Michael Barone), it has been funny to listen to and read the coverage of the Lamont/Lieberman primary and note it's complete lack of nuance and detail. This is especially odd since much of the MSM grand poobahs live in Connecticut or here in New York and would presumably know a thing or two about the Constitution State's demographic/electoral dynamics. Basically you have the Limousine Liberal Riviera towns on the Long Island Sound populated with Kennedy-style landed gentry and hedge fund magnates. Lamont all the way. Then you have Litchfield County, the summer and retirement paradise for NYC-based middle-aged gay couples and aging flower children from the Upper West Side. These people would vote for Trotsky if he was running. All Lamont. Finally, of course, there is that hive of socialism Yale Township, also known as New Haven. Do I need to tell you? Lamont. In Lieberman's corner were the decrepit cities that time forgot, that mostly live on the government dime and rely on Lieberman's seniority to keep the federal dollars flowing - places like Bridgeport, Hartford, and New London.

So it was union guys versus very, very rich people. The only question was turnout. Had there been a charity wine auction to benefit the Amazonian rainforest in Westport that day, Lieberman would have won.

To draw national implications or even implications for the general election from this totally predictable primary would be silly.

Sure enough John Fund writes in his Political Diary today:

"If you tell me how far you live from Long Island Sound and the water, I can pretty much tell you how you voted," one Connecticut political analyst told me. He noted that all of the tony towns close to the water went overwhelmingly for Ned Lamont, led by his native Greenwich, which gave Mr. Lieberman only one-third of the vote...Mike Barnicle of MSNBC noted that the split reminded him of an updated version of the battle between Eugene McCarthy's anti-war college student supporters and union hardhats over the Vietnam War: "Today, in Connecticut it was a battle between Dunkin' Donuts and Starbucks, and the folks holding the soy lattes won."

Keep Polluting Until We Say It's OK Not To

A big and important step on our road to greater energy efficiency and lower pollution, while still benefiting from the glorious and wonderful role of hydrocarbons in our lives, is only months away for those lucky enough not to live in California or New York. Sadly I live in one of these states, which has chosen via its politicians, to sacrifice a productive incremental gain in favor of a less attainable major leap. So, for now I'll plan on continuing to drive my less efficient and dirtier vehicle in 2007 and polluting more than I need to. Cheers.

You can look, but you better not touch (in NY and CA)...

TJ, Limousine Liberal

I will admit to an embarrassing ignorance on many of the finer and intriguing details of American history and particularly the founding era. For instance my knowledge about Thomas Jefferson was confined to only the most salient details of his role in our founding and as our third President. Thanks however to Ron Chernow's excellent biography of Alexander Hamilton, I am getting more of a detailed picture of Thom. Jefferson the man.

Jefferson was an abolitionist who of course did not free his own slaves, because his lifestyle depended on their toil on his plantation, which was perpetually in debt due to his luxurious lifestyle.

He was suspicious of finance and commerce, feeling that America should be principally an agrarian society, apparently believing that wealth and power should concentrate among landholders, which of course is good for people who own land but bad for people who seek to create and broaden societal wealth outside of land ownership through commerce. This is very much an 'I got mine, you can't have yours' attitude.

Jefferson was deeply enamored of the French revolution and did not recoil or lose zeal for it while the likes of Marat and Robespierre were declaring 'enemies of the people' and commiting open slaughter.

Jefferson appeared to see tyranny in every move of the new federal government such as the establishment of the Bank of the United States, although when in office it was cool for the federal government to buy land to double the size of the nation or fund the Lewis and Clark expedition.

Jefferson's demeanor prior to his political career was that of a foppish aristocrat, enjoying a sybaritic life in the salons of Paris. Upon returning to the US to take his post as Sec. of State in New York, he went to great expense and effort to decorate his New York residence with the finest, extravagantly expensive French furniture.

He did not look favorably upon the ascendancy to power of thoroughly capable albeit not well-born figures, such as the illegitimate, immigrant Hamilton.

Naturally Jefferson's career and role in our nation's history is long and complex, and his importance can hardly be understated but by Jove, is it not obvious - Thomas Jefferson was America's first prominent Limousine Liberal!

Second Myth of Politics on Display

The Second Great Myth of Politics states that 'Democrats care more about the little guy'. (BTW, the First GMP is that Republicans are more fiscally responsible.) This second myth is the first thing that comes to mind this AM having perused Michael Barone's take on the Lieberman/Lamont primary in today's WSJ and Greg Mankiw's inquiry into Ned Lamont's views on trade. From Barone we learn that the Lamont voter is an internationalist, a globally-minded soul that sees no particular exceptionalism in America versus the rest of the world. One would think then that such folks would feel no particluar passion about whether a Peruvian or a Paducahan got a particular job, say, building tractors or some such. Why does an American have any more valid a claim to work, receive a wage and avoid poverty than a non-American short of competing for that job via performance? Surely, with no view of American exceptionalism, an internationalist would agree our citizens have no more right to avoid poverty than citizens of other nations. One would think and one would be wrong. As Mankiw points out, Lamont seems to feel, and his voters no doubt agree, that Connecticut and by extension America are somehow especially deserving of the opportunity to work and avoid poverty. He decries that some of Connecticut's jobs have moved overseas (although, what he probably doesn't know is that more of CT's old jobs have been lost to places like Florida, Texas and Arizona rather than China and India) as a profound injustice. I can assure you it's not an injustice to the Chinese or Indian (or Texan or Arizonan) who nabs that job formerly performed in Connecticut. So, if you're an internationalist, what is your beef?

This is nothing new. When it comes to trade and economic policy, the supposed internationalists consistenly advocate protectionism and American isolationism and they are no more global citizens than you or I. Their motives for proclaiming this vaunted transnational attitude is purely to assert a false superiority over different-minded folks. It's pomposity. It's elitism. Don't buy it.

Bad Day for Lebanese Manhood

Foreign Minister Tzipi Livni called Tuesday in her Knesset speech to the Prime Minister of Lebanon Fouad Siniora "to wipe away his tears and to start acting in order to create a better future for the citizens for whom he is crying."

Biting...and this from a GIRL!

Meet Capt. Lanny Renault

Lanny Davis, a putatively smart and sophisticated man somewhere in his sixties, is shocked (shocked!) that vitriol and hatred can also spew from the political left as from its obvious native home, the political right. I mean after all, his daddy told him that it was only those evil haters on the right that were capable of such behavior. Well Lanny, dear old dad steered you wrong and it is your own willful blindness that has caused you to live 2/3 of your life and not see it. You should have spent a couple nights over at my house sitting at the kitchen table where you would have learned that, as my dad used to say "Liberals are only liberal when you agree with them."

Hiding In Plain Sight

Kevin Hassett has a pretty simple piece of advice.

Too Busy Being Green, Part 2

Well, the big news roiling markets today is that BP (fka British Petroleum) has shut down the largest US oil field because of corrosion in the pipeline. Don't be too hard on BP, because it is well-known that corrosion can creep up on you. Heavy duty steel is known to degrade rapidly over the course of a several few days or a few weeks at most and can easily go undetected.

This is not the first example of BP taking their eye off the ball and fumbling big time. Sadly, the last time it cost people their lives. So is this just more of the typical callousness that we should expect of 'Big Oil'? Maybe, but BP is the poster child for the self-loathing energy company that is PRing us to death so that we will think it is a swell, eco-righteous entity. BP, or "Beyond Petroleum" as the ad campaign tells us, spends tens of millions on their annoying ads, one of which has some inarticulate hippy/surfer dude telling us we need to "make that change" because "we're messin' things up." How about increasing the budget for infrastructure maintenance instead?

$280 Billion Found in Economy's Sofa Cushions

There are several "go to" themes that the MSM has been flogging to make the remarkable performance of the economy seem like the opposite. As it relates to unemployment, the MSM theme is that it is so low because discouraged people are opting out of the workforce. The NY Times had a piece yesterday about how it is mostly men between the ages of 30 and 55 who constitute this group (via Cafe Hayek). I think it is excellent that we live in a country where things are so good that middle-aged men can forego work in favor of leisure and sponge off their wives and/or accumulated wealth. At worst this shows some of the dangers inherent in a dynamic economy where the value of skills is constantly in flux, but it hardly speaks to economic weakness.

Another theme is that while personal income is rising, incomes are not keeping pace with inflation, thus the little guy is "falling behind." Well, here's a little tidbit from Brain Wesbury's Data Watch:

"...the Bureau of Economic Analysis (BEA) released their annual benchmark revisions to Personal Income data for 2003-2005. The net revisions added $71.2 billion to personal income and $29.0 billion to wages and salaries. This follows last year's 2004-2004 revision which added $87.7 billion to personal income and $91.8 billion to wages and salaries."

Whoops, we missed $280 billion! Wesbury concludes that wages are rising faster than consumption and inflation, so people are accumulating puchasing power and wealth. They would have to be for so many men to hang out the "Gone Fishin' " sign.