Your Lying Eyes

Dedicated to uncovering the truth that stands naked before your lying eyes.

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28 February 2009

OMG: Cochran and Razib on Blogginheads!

Watch it, Dammit. And buy Greg's terrific book, the 10,000 Year Explosion.

They of course discuss human evolution, the topic of Greg's book. It's a fun and interesting discussion, but the book is a lot better at making it all understandable.

26 February 2009

Does the Constitution Mean Anything Anymore?

From Article 1, Section 2:
The House of Representatives shall be composed of members chosen every second year by the people of the several states, and the electors in each state shall have the qualifications requisite for electors of the most numerous branch of the state legislature.

No person shall be a Representative who shall not have attained to the age of twenty five years, and been seven years a citizen of the United States, and who shall not, when elected, be an inhabitant of that state in which he shall be chosen. [EA]

So how is this even remotely possible: Senate agrees to give D.C. residents a vote.

Astonishingly, the very same people who are so certain that the Constitution does not require that members of the House of Representatives represent people living in an actual state, also fervently believe that that same Constitution clearly and unambiguously guarantees the right to an abortion. In a more civilized world, this would be clear evidence of mental illness.

25 February 2009

On a Happier Note...

After a brief hiatus, Untethered is (nearly) back on line!

Dear Mr. President: 'Soaring' Rhetoric Not Going to Cut It

You've got to do a little more than give inspiring speeches and promise the moon, Mr. Obama, if you expect to actually accomplish anything. Sorry to disappoint you, but all the income redistribution, economic justice, environmental justice, and education justice you were dreaming about ain't gonna happen, because there ain't no mounds and mounds of money lying around for you to suck on. You're going to have to actually sit down and figure this mess out and actually do something about it.

Words of love, soft and tender
Won't win a girl's heart anymore
If you love her then you must send her
Somewhere where she's never been before
Worn out phrases, and longing gazes
Won't get you where you want to go - No!
Words of love, soft and tender won't win her...

You oughta know by now,
You oughta know, you oughta know by now,

Words of love, soft and tender
Won't win her anymore.

"She" is the economy, and she's not going to respond to mere words, and certainly not to worn out phrases. I must admit I was tired of your rhetoric after the first 20 seconds I first heard you speak, but you're really wearing out your welcome across the heartland.

Newsflash: We didn't elect you so that you could spend hundreds of billions trying to educate the uneducable; we didn't elect you so you could magically invent energy sources that despite decades of sky-high energy prices Europe and Japan never managed to develop; or to bloat the size of government during a period of deflation. No, we voted for you because the country is a mess and the last guy was a dope and the guy you ran against was a bigger dope. We expect you - Mr. Smart Guy - to figure out what's going on and do something sensible. Hey, wha' happened?

This is what I would do if I were you. You summon Larry Summers to the oval office for a special meeting. Sure, Geithner's going to sulk because he wasn't invited, but that's ok because he's on his way out - please, tell me he's on his way out...And you ask him to lay it out for you. He starts babbling, you let him go awhile, then you interrupt him. "No, I mean how much money is out there? Exactly how much of these assets are any good, how much are done for, what's actually salvagable?" Then when he answers "Well no one really knows..." You lean over,pick up the phone and say "Get me Napolitano!"[she's your Homeland Security chief, in case you forgot].

You let Larry go on a bit, then when the phone rings, you say "Janet! [her first name is Janet] - get in touch with that geek in charge of Google. Tell him I'm commandeering his programming department - Larry Summers has a job for them." Then you hang up. Sure, Google could fight you, but you're the president, and they'd have to go all the way to the Supreme Court to stop you. No sweat, you only need them for a month. "Larry, you and your boys need to talk to these Google guys and tell them how to figure out how much money we have out there. I need an answer in a month. If they hem and haw, tell'm we'll call Yahoo. It's a bluff, but they'll get the message."

Then you go out and deliver a little talk to the nation. No bullshit this time. Plain and simple. You tell us your going to get to the bottom of our nation's financial system. "In one month, we will have a full and public assessment of every registered asset in this country. Names and social security numbers will not be revealed, but everything else will be published and identified - account numbers, addresses, serial numbers along with an assessment of their market values. Every derivative will be traced back to its underlying real asset. Fraudulent arrangements will be dissolved and their perpetrators prosecuted.

"We will then assess the health of every financial institution. Of course this is a free country, and each of these assets can actually be bought and sold for more or less than our initial assessment, but make no mistake, within 30 days insolvent institutions will be shut down and their assets sold. The healthy will survive. The days of bailouts and empty promises are over. This crisis will be ended and we will recover, but not until we uncover the truth, and that quest begins today." [You can then throw in some bullshit about not letting people starve if you feel you must].

Well, I can dream, can't I?

[As usual, little of this is original. The idea of a wiki-like public accounting of assets I got from Steve Sailer. Commandeering Google programmers to figure out our true asset-base I stole from Mencius Moldbug. The need for Obama to stop the BS and get down to business is pure Denninger. And, of course, the Words of Love are from John Phillips.

24 February 2009

The Hillary Paradox

Hillary Clinton went hat-in-hand to China last week to beg them to buy our T-Bills so we can fund our stimulus package, arguing it is in our mutual interest for them to do so? Why would it be in China's interest? So the U.S. can continue to import their goods, of course. But if we're spending the stimulus on Chinese imports, then it isn't much of a stimulus for the American economy, is it?

Have We Hit Bottom

I'm looking for a possible contrarian bump today in the markets as many will assume that the bottom has been reached - after all, how could it fall below 1997 levels? Surely, that's not possible.

Yet the other shoe - or shoes - have yet to drop. Now we hear that Amex is offering a reward to some of its customers to leave.
American Express Co. (AXP) is offering a $300 incentive for customers to cancel their accounts as the card issuer and payments processor grapples with surging loan delinquencies and reduced card-member spending.

The move comes as credit rating firms have warned that rising credit-card delinquencies could push the industry's charge-off rate into the double-digits by the end of the year from December's record level of 7.7% amid higher unemployment and a bleak economic outlook.

"It's a tool that has been used in the past to motivate borrowers to close off balances," says Scott Valentin, an analyst at FBR Capital Markets. Valentin cited an instance some years ago where National City offered $200 to borrowers who would close their home equity lines of credit.
A potential problem for the company "is adverse selection," says Valentin. " The risk is that the ones that take $300 and close their balances do have the ability to pay, and the ones left behind that don't take the $300 anyway couldn't afford to pay off their balance."

10 February 2009

Oh No, Not Like Japan!

Everyone's worried we could end up like Japan. In his press conference the O-man admonished the country what fate could await should we say "No, we can't":
I think that what I've said is what other economists have said across the political spectrum, which is that if you delay acting on an economy of this severity, then you potentially create a negative spiral that becomes much more difficult for us to get out of. We saw this happen in Japan in the 1990s, where they did not act boldly and swiftly enough, and as a consequence they suffered what was called the "lost decade" where essentially for the entire '90s they did not see any significant economic growth.
I think if that should be our fate - a decade of 1.5% real growth - we ought to declare a national holiday. I'm afraid what lies in store is something much worse than that, and Obama's stimulus can't possibly prevent it. But where do people get the idea that comparisons to Japan are remotely valid?

Around 1990, Japan suffered a sever asset bubble crash. But aside from this, both nations having advanced modern economies ranking first and second in the world, the U.S. and Japan could hardly be more different. Japan has few natural resources, yet exports heavily (17% of GDP vs. the U.S. at 9%). Japanese companies invest more heavily (22.5% of GDP vs. 14.6% U.S.) and at the time of the crash a very high personal savings rate. Japanese foreign investments ($597b) vastly exceed foreigners' investments in Japan ($140b). And Japan's reserves of foreign currency and gold dwarf those of the U.S.A ($954b to $71b).

With these high rates of saving and investment, there is some logic to Japan attempting some government stimulus to offset all the money being socked away. And given the huge current account and investment surpluses, Japan could surely afford to throw some money around to try and jump start things. But even given these favorable conditions, government spending had little impact when tried.

Here in the U.S., on the other hand, we've just gone through one helluva spending spree. We carry an immense trade deficit ($568b in 2008, a big improvement over prior years), and foreign entities - foreign governments in particular - hold immense stockpiles of U.S. treasuries as well as other American assets. (Our foreign debt amounts to 84% of GDP - and that's as of June 2007 before our recent $1 trillion deficit. Japan's foreign debt is 33% of GDP). We have no excess savings to free up, nor do we have any reserves stockpiled we can tap into. What in God's name would lead anyone to believe such a stimulus package could work here?

Source: CIA World Factbook.

Oh, and one more thing - Japan's per capita GDP is listed as $35,300, while the U.S. is listed as $48,000. What makes us think our standard of living should be 33% higher than the Japanese? Of course I'm glad it is, and fully intend to enjoy it while it lasts.

Related: Dr. Housing Bubble's look at the "Is this another Japan" question.