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Thank you for your kind (and unkind) letters from the Canada, America, and Australia. Mark reads all the letters, but especially enjoys the vicious ones. Drop a line to Mark's Mailbox and if you're chosen to be the one and only Letter of the Week you'll join our roll of winners from four Continents and receive a copy of Mark Steyn From Head To Toe. It would help if you could indicate your city or town, or, at least, your state, province or country. Failing that, your continent or hemisphere would do.
Letter of the Week
THE TARP WAS A HEDGE-FUND BAILOUT
I am also in the financial services business, and I am a conservative libertarian to the point that I would agree with the Austrian economists who argue the government should NOT be in the business of propping up the financial industry. Every time a government gets control of the currency (or credit in this modern financial system), the government inevitably debases it. That's what has been happening under the Fed since we went off the gold standard (such as it was!) under Nixon. We have been printing money at an alarming rate ever since. Go to the now infamous St. Louis Fed chart and put it on a log scale. It is still amazing, but I find the dramatic change in slope after 1970 even more damning. We should have let all the woofy-poofy financial instruments blow up. The TARP was a hedge-fund bailout. The Wall Street types thought the world was ending because they had baked into their models constant expansion of credit. When credit went flat -- not declining, just flat -- they thought the end was near. That's because leveraged bets that go a little south go almost immediately to zero. Go on margin at a factor of 10 and buy 10 million shares of a safe investment like Apple stock. Then see what happens what happens when Apple stock declines by 10%. You are done! Call Hank and Ben and make me whole! We could have bought every under-water mortgage and given the property to the homeowner for less than we are spending on TARP/TALF and the whole beautiful pile of poopie on the Fed's balance sheet.
After all that junk blew up we might not have a bunch of New York money center banks, and we might have lost a bunch of NYC money-center wannabes, but we would still have a banking system. It would be cleaner and more risk conscious. We would be better off than we are now.
There, that might not have been quite as polite as initially suggested.
Best to you!
Brad Young
Re: More partisan pettiness
A TRILLION HERE…
Remember Everett Dirksen: "A billion here, a billion there, pretty soon you're talking real money"?
Just for fun, I asked 37 people (almost all white, more than half women, ages between 17 and 64, education high school through doctorate): "how much more is a billion than a million?"
Only 7 got it right. Seven. The wrong answers ranged from "It's a million million" (perhaps
true, if the source were British...?), down to "A billion is 10 million". Most frequent answer (19 times): 100 million.
Gee, d'ya think the lack of public outrage might be due, in some small part, to the fact that they simply don't understand how much money this is?
“Victory”
JUST GET WITH THE PROGRAM, FOLKS
My friend Barbara Nicolosi wrote me that Obama reminded her of Henry VIII in Bolt's Man for All Seasons: "Thomaaass! I'll have no OPPOSITION!"
If we would all just get with the wonderful new program and take the pledge to serve him, this country could move beyond partisanship.
The problem is the ongoing resistance. Something will have to be done about that. It's standing in the way of hope and change.
See you in the Tower?
Katie van Schaijik
DEEPLY DISAPPOINTED
On the other hand, how should we keep a straight face if Republican leaders in congress who spent the last eight years behaving like Democrats suddenly try and argue that they oppose $850 billion in "stimulus" spending on principle. Lest you take my comments as coming from a skeptical liberal, I am I am a conservative, a Reagan Republican, and deeply disappointed in my
parties leadership.
John West Carrington
Re: Nuclear checkout
UNLIKELY SCENARIOS
Your comments on the Berkeley Library vs. Peace and Justice Commission dust up and the unique nature of the sentence describing it reminds me of a George Carlin routine that had him noting how given the law of large numbers it is very likely that the next sentence you speak will probably have been uttered at least once before. For fun, he suggested composing one that hasn't been spoken previously. His suggestion: "Hey, let's round up Eva Braun and go watch the women's softball game tonight." Methinks if Mr. Carlin had lived to see your contribution he would have approved.
Big fan from Texas,
Ron Kurtz
NUCLEAR REACTION
Sir: CA has easily passed its sell-by date. I live in San Jose and don't read the Mercury or the Chron as useless. But I read further down in the column and saw that my City Manager makes $342,000(!!!!!!) in salary. In a city with a chronic budget, school, illegal alien, library, fire dept, never enough money......problem. The noise you head is my head exploding. Yes, it was news to me. But my House Rep. is Mike Honda and it's hard to watch everything. Good work that you do. Thanks for going out into the fields every day.
Diane Martin
SAFE AT LAST
I think you are being too glib about the Berkeley Nuclear Free Policy. The first time I went into Berkeley, I noticed the sign at the city line reading, "You are entering Berkeley" and "Nuclear Free Zone." I had no idea I would feel so safe, knowing that nobody in the city I was in was allowed to have a nuclear weapon. When I went back to the hotel I was staying in in Fremont, CA, I was unable to sleep wondering if someone had their nuclear weapon there.....
Andrew B. Eisman
Milpitas, California
Waltham, Massachusetts
RADIATION SCARE
Berkeley is behind the times. In the early 1970s I lived in Canada. When I went to buy an antistatic brush for my camera film, I had to fill out a permit for radioactive materials (the brush had tritium, or something).
Robert Allgeyer
Florida and California
NUTTY BUT NICE WEATHER
Not all of us here in the Bay Area are liberal nutcases. Just the overwhelming majority. The weather is good though.
Tim Boyle
Cupertino
STILL WAITING
I live there. Every time one of these hair-brained issues comes up I send an e-mail asking the City to redirect the related expenditure towards the pothole in front of my house. So far, no luck.
Jim McSweeney
ORWELLIAN
I have followed your posts for at least two years now but I never felt a real need to comment. However on "The Corner" you quoted from the "Peace and Justice Commission". I thought it was one of your wacky jokes. When i clicked on the article this name seemed to be real. Please tell me I am wrong. What a "Orwell" name. What perfect companions for the "1984" thought police.
Brad McDonald
Canada
PS: Some of us actually read widely [including "America Alone"] and try hard to think about issues [not easy with so much conflicting information].
Re: The nation as company town
DYSTOPIAN PICTURE OF BRITAIN
After reading your post in the Corner, 'The Nation as Company Town', I wondered if you have ever read/reviewed Anthony Burgess's 1985? It seems to be the only Burgess book not currently in reprint. I had to order a beat up used copy from Amazon a few years ago and wondered if the reason it seems to be the forgotten child of Burgess publications is that the dystopian picture it painted of future Britain was a bit too close for comfort. He didn't anticipate Thatcher, which put off the day of reckoning by 20 years, but in all other aspects it is a frighteningly accurate portrayal of modern Britain.
John Hudock
http://commonsensewonder.com
THE FINAL NAIL IN THE FREE-MARKET COFFIN
Can't say I agree with much of what you have to say. My feelings on the Republican Party in general and Jorge in particular separate us by miles. However, that post was dead on. I intend to steal this line (attribution on request only):
"Big government is where once successful nations go to die."
Brilliant! Ron Paul (The Prophet) couldn't have said it better (although, I'll be checking later to see if in fact he did), Jorge wouldn't have understood it and most GOP congressmen would have wailed, "BLASPHEMY", while covering their eyes and ears. I'm ill, tired and broke but I know with every remaining fiber of my being that Obama's health care plan, the final nail in the free market coffin, will see me dead in no time. I've recently watched a good man die from prostate cancer, a Canadian fire fighter, because of pathetically bad care. In this country, or what was this country, he would have lived another twenty years. A pox on all socialists.
Emery Nelson
Sonora, California
Re: Kristol vs Damon
A 'EUROTRIP' FAN
I can't believe you're also one of the 38 people who have seen Eurotrip. Scottie is
actually my wife's ringtone and Eurotrip is one of our favorite movies. I am no
longer embarrassed to say that a Canadian is my favorite English-language author.
Step aside, Mark Twain.
Thanks for the laugh,
Yali Elkin
AND ANOTHER
Give Matt Damon credit ...for Scotty Doesn't Know. It was pretty funny.
He grew up as Howard Zinn's neighbor, right, and later featured him in a reference in “Good Will Hunting”, which I thought was unwatchable.
Roy
WHAT PASSES FOR GENIUS
Remember, Damon played a genius in a movie, which makes him more qualified than anyone else in Hollywood to debate Kristol.
Jim Rudolph
Meridian, Idaho
Re: Waltzing Matilda
WHEN AVA MET MATILDA
Mark, in your encomia to Waltzing Matilda, you omitted perhaps the most moving and powerful use to which the song has ever been put, namely, in “On the Beach”. The final scenes, especially as Ava Gardner races to wave – in Fred Astaire’s car! - goodbye to the departing submarine in possibly the last joyride in Australia and the world, is a cinematic masterpiece. (I’ve always thought the scene is a conscious evocation of Ava’s teary wave goodbye in “Showboat”.) The message of the song and the movie merge sublimely in a way I for one could not possibly have imagined beforehand.
Joe Sansonese
Frederiksted
St. Croix, United States Virgin Islands
BEST COUNTRY IN THE WORLD
Thanks …
Number one: for the book America Alone; great reading, (and signed too!)
2: For your great articles at your site, NRO, OC Register and others. Have been an avid follower since Feb last year, following the HRC rubbish. Re: 'Waltzing Matilda': I am a US born Aussie, took “my bloody oath” last Jan 26th. Lived here almost half my life now (27 yrs); best place in the world. Was here when they decided 'Advance Australia Fair' was to be the national anthem. “No-one” knew the words then, and many still don't!!! Yet children and others in most countries know the words to 'Matilda' (I know I did back in the 50's). My choice back then was that 'Matilda' should have been the anthem for just those reasons.
Good work and God bless.
Stay warm as I know you were/are freezing your butt off in NH, but we're a bit warm here (cooled down from 100F to 104F during lawn bowls the other day.)
Bruce 'Boston' Jones
Australia
Re: Dutch courage
THINKERS ON THE JOB
The coercive urge …only goes in one direction
Funny how that works. OK to bomb Sderot. BAD to bomb Gaza.
I once read an interview with a University of Chicago law professor. One topic was the disproportionate representation of blacks in the prison population.
Her solution? Put more whites in prison.
Everywhere you look thinkers are on the job.
John A Russell
Re The Audacity of Dull
HERE’S HOPING
Thank you, Mr. Steyn. Your article in NRO was the first real belly laugh I've had about politics since the election. If Kipling was right and laughter is the death of little tin gods, then there's hope yet.
Sarah Adams
HEATED BEAST
I am one of the millions who did not watch the Obamanation Coronation this past week. I had better things to do, like watching dust motes gather in the light. Or something. I have heard about the hypnotic effect of The One Who Will Save Us, and I did not watch nor hear him due to that reason and not wanting to witness the new error in American history. I did see a photo of The President of the Universe sitting at his empty desk, the day after his crowning. He looked too small for the job. President Bush, with his annoying cowboy swagger, at least said to the enemies who lurk out there: "Bring it on, sissies." Somehow I don't get that same vibe from Sir Hope/Change.
Apparently you did stare into his piercing eyes too long, dear, to write thus:
"Oh, yes, yes, yessssssss, we can!" I whimpered, as his smoldering eyes bored deep
into the very core of my being and our souls met and I knew he was the only man who
would ever win my heart, a heart beating so fast and loud I could barely hear what
he was saying – something about executive orders, I think. "Oh, yes, give me one
right now!" I cried, as my palpitating bosom burst the ties of my bodice causing my
leg to vibrate so much my bustle fell off.
"Aye, you're a comely lass," said Squire Barack, as my tresses tumbled over my stays
and his riding crop fluttered teasingly up my thigh. "But I don't need to go
a-wenchin' in the White House Press Room…"
I hope you have kept your pantaloons both dry and under your bustle, you heated
beast of a man. You crack me up.
Anyway, I have a pledge for the masses: I don't want to change. Yep, that's right. I am not gonna change or hope too much, as things are going to probably stay the same unless a Gitmo dude moves next door to me (as could happen). Washington DC will remain the same bunch of well-dressed blow-hards (Clinton will vouch for that) as in the days of yore. Hillary Clinton will be unable to bring peace in the Middle East, as her fellow women Secretary of States in past administrations will attest. (Note: why does it not dawn on Presidents that Middle Eastern men do not respect females, no matter how many titles they hold or how brilliant they are on paper? I think John Bolton would have been a better pick to get 'er done).
I could be wrong, but the seas remain the same level, and earth's axis is the same, and world peace did not hope/change with the first or the second oath of Obama. In some circles people are already drinking Bush-Light as the symbolic toast to Barack O.
I want Obama to succeed in this time of economic woes,and for our country's survival, but I do not think the path to socialism is the fork in the road he needs to take. Any measure of his success, in my not so hopeful and unchanging world, is how strong he will stand against radical Islam. Dare he even say the words?
All best. Keep fighting. I dare say my bosom heaves with you.
Lin
SOBER AT LAST
The BBC's Jim Naughtie before the Obama inaugural speech: "He'll strive, of course, for a bit of the weight of Lincoln, the memorability of Kennedy, the passion of FDR."
The BBC's Jim Naughtie immediately after the speech : "It lived up to the billing that it might be quite sober."
DB
Re: Insight of the Day
IN THE LOVE BUBBLE
They just don't get it, Mark. They think if we do all the right (aka politically correct) things, we can live happily and peacefully in our eco-friendly bubble where evil doesn't exist. When reality in the form of an exploding skyscraper or shopping mall or amusement park revisits us, they will remember that there are no simple solutions for the complex problems we face. It's unfortunate that the American people didn't learn the tragic lesson of 9/11, but it appears that most did not, as they overwhelmingly detest the man who kept them safe and revere the man who will not.
Marianne Gaio
THE CHANT FOR CHANGE
To the average liberal this lady's "insight" is considered profound. Is it any wonder the vapid chant of "Change" won the day? We are in for a very long four years, indeed.
Edmond D. Smith
Putnam, Connecticut
PART OF THE PROBLEM
Reminds me of my email exchange with my liberal Jewish NY friend. I just sent her the Arab vs Jew in Malmo video from Atlasshrugs. The one where the brave Swedish policemen make the peaceful Jews disband (even thought they had the permit) when the Arabs acted up.
Here's part of her response:
"that was really depressing, i've always thought of sweden as generally a pretty forward thinking nation...by the way, what kind of car do you drive? oh sorry, it's not a car, it's an s.u.v. well i'll just go dig up some oil in...wait...where does the oil come from? oh right, those pesky middle east countries".
So I'm part of the problem because I drive an SUV.
Carolyn
FROZEN SMILE
I live in Boston and so you must understand my pain that I have to live amongst this kind of thinking every day. I spend a lot of time at parties with a frozen smile on nodding my head as people spout this kind of crapola. What you should note, too, about this mother's adoption of her six year old's way of thinking -- these are the types of deals that children often make with God. If I get a pony for Christmas I promise I will be nice to my little sister forever. If Mom lets me sleep over at Kevin's this Saturday I promise I will keep my room clean forever. They presume an omniscient being capable of granting wishes upon His whim. So, in Democrat speak, I guess that means Obama.
Melissa Davis
BUMMER
You are harshing my Hope buzz, man. Why can't we all just Hope along.
Charles V. Loncon
Savannah, Georgia
VOTES FOR AIRHEADS
Isn't Paglia ( or was ti Coulter ) on record as implying that "reasoning" like that in the letter you quote, is why women should not be in high office, and perhaps not even allowed to vote?
Ha.
John Spaulding
THE AVERAGE VOTER
Your story about the lady and her child's letter to the Big O made me think of a couple of Winston Churchill's quotes. The first: "We sleep safely at night because rough men stand ready to visit violence on those who would harm us." - Winston S. Churchill
Regarding this, we are in real trouble for this woman and too many like her are not raising their men to be "rough" enough to guard this country.
The second quote I fear is getting to be far too accurate: "The best argument against democracy is a five-minute conversation with the average voter." - Winston S. Churchill
George Hawks
Southlake, Texas
BABY TALK
From the mouths of babes comes -- well -- baby talk. Okay, hug the kid, but then, please, let it be.
Steve Crews
Chicago
Re: Econdomonomics
REDUCE KIDS, REDUCE COSTS
Nancy Pelosi thinks that preventing children is a net benefit to the state. Ergo, spending hundreds of millions in "stimulus" money makes sense:
"STEPHANOPOULOS: We also heard from Congressman Boehner coming out of the
meeting today that again a lot of that spending doesn't even meet the same
test you just talked about right now.
Boehner : we have to find a package that is the right size
STEPHANOPOULOS: Hundreds of millions of dollars to expand family planning
services. How is that stimulus?
PELOSI: Well, the family planning services reduce cost. They reduce cost. The states are in terrible fiscal budget crises now and part of what we do for children's health, education and some of those elements are to help the states meet their financial needs. One of those - one of the initiatives you mentioned, the contraception, will reduce costs to the states and to the
federal government.
STEPHANOPOULOS: So no apologies for that?
PELOSI: No apologies. No. we have to deal with the consequences of the downturn in our economy. Food stamps, unemployment insurance, some of the initiatives you just mentioned.what the economists have told us from right to left. There is more bang for the buck, a term they use, by investing in food stamps and in unemployment insurance than in any tax cut."
And who will be left to make money if all those unwanted taxpayers have been
prevented?
The Marxist pre-eminence of the State in her thinking is beyond belief.
Kirk W. Kelsen
Vallejo, CaliforniaPATRIOTIC PROCREATION
For your information, in Tokyo, workers are being told to go home and make families. I thought immediately of you.
In other news, Pelosi thinks that apparently our high birth rate is a problem, in terms of government benefits. Kids are just too much of a drain on the system! Apparently she can't do basic math. Without a reasonable birth rate, all of our social welfare systems collapse.
Aaron J. Walker, Esquire
NO SURPLUS THERE
Isn't Pelosi's family tree telling??... 5 children.... 7 grand-children, or is it 6... and her youngest child is nearly 40.
Truly a hopeful family.
ED
BAILING OUT THE ABORTION INDUSTRY
Regardless of whether the bailouts are a good idea or not, why haven't I heard one single word from anyone about getting rid of the horrible lending "criteria" pushed on this country under the guise of the CRA? One would think that getting rid of the CRA (or relevant portions thereof) along with forcing Fannie Mae and Freddie Mac to tighten up their criteria for buying/underwriting mortgages would be a loudly proclaimed precondition to any bailout of a financial institution that participated in the subprime mortgage market. You know, so we don't have to do this again in ten years.
And while we're at it, what about Pelosi's desire to bail out Planned Parenthood? If that goes through, it will render her favorite ponzi scheme more illiquid by reducing the number of future workers. Perhaps any bailout of the abortion industry should be tied to social security reform.
Steve Carr
Buffalo, NY
ONE CHILD PER FAMILY
“Pelosi says birth control will help economy”.
I assume the next step is a one child per family policy.
God bless and good luck to us all.
Pastor Spomer
New Mexico
DOUBLE ENTENDRE TROUBLE
There are more double entendres in this quote than I care to mention:
"’How can you spend hundreds of millions of dollars on contraceptives?’ Boehner asked. ‘How does that stimulate the economy?’”
“Boehner said congressional Republicans are also concerned about the size of the package.”
Um...that's what she said:-)
Justin Converse
DEMOCRAT EUGENICS
Isn't Speaker of the House Nancy Pelosi's move to add birth control funding to the new economic "stimulus" package a tacit endorsement of Eugenics?
Jim Good
CHILDISH THINGS … LIKE CHILDREN
I wonder whether anyone bothered to look up Barack's quote from Scripture about putting away the childish things. It's at the end of chapter 13 of 1 Corinthians, on the importance of love. In fact, Paul compares love to the mere showmanship of words at the beginning of the chapter: “If I speak in the tongues of men and of angels, but have not love, I am only a resounding gong or a clanging cymbal.”
And I can't help wondering whether Barack's pledge to put away childish things might explain why he's intending to export abortion to countries dependent on the US for "aid".
Anthony English
DRUNKEN SAILORS
I have been watching C-Span's playback of last Wednesday's Appropriations Committee
session. To label that session as spending like drunken sailors is a slander on the
fiscal prudence of those mariners.
Appalling!
Bill Dooley
Pine, Colorado
PENNIES FROM HEAVEN
As a faithful reader of your column (I think you are one of the most articulate and perceptive "pundits" we have, as well as one of the most fun to read), I know you are knowledgeable about Broadway shows and pop music classics. Do you know the 1930's Crosby hit, "Pennies From Heaven"? It popped into my head today as I was thinking about the so-called stimulus package unveiled by Ms. Pelosi and company, only in my version, it was "Billions From Heaven". I also thought of the Broadway show "Lil Abner"; one of the songs in it was "The Great Big Come and Get It Day".. As the French would say, "Plus ca change..."
I have never been so frightened for the future of this country as I am with the Obama crowd and the current Congress, or so depressed about the future of my two-year-old grandson. Do you suppose that if enough of us moved to Canada, we could effectively pull that country to the right and make it the new "city on the hill", or is it too far gone? Ironically, I am a descendent of United Empire Loyalists who went to Canada from New York at the time of our Revolution. Maybe we should have stayed there...
Karen Haff
Re: Tarp n’ carp
MILLIONS, BILLIONS, TRILLIONS, WHATEVER
Unlike smart-asses like you and me, most people cannot comprehend a "trillion". I explain "a trillion dollars" like this: If you spent one million dollars every week, 52 weeks a year, you would have only spent the INTEREST on a trillion dollars!
Gene Notkin
THE CREATURE FOM OUTER CONGRESS
I'm not sure how the "wallah's" statement concerning the urgent necessity of passing TARP immediately, at the end of October, squares with the fact admitted in November that NONE of the appropriation was spent as originally planned.
Why Do I Get the Feeling We're Watching a 1950s Sci-Fi Flick?
Lane Core Jr.
HE WAS RIGHT, AND YOU ARE WRONG
I am writing in response to your comment in the Corner to your learned libertarian
friend, who took you to task for underestimating what the first half of the TARP
money achieved, and how important it was. He was correct, and your reply posted in
the Corner still just doesn't get it. The entire pundit class and both parties
continue to operate in a fog of populist blame-mongering, and have yet to face the
economic reality of the situation.
You can't get more capital out of the banks. You can't push the losses onto them.
It is not a political question of will, it is a mathematical impossibilty of
economics. The banks have already been pushed far past the breaking point. The
original losses allocated to them have already destroyed core functions of financial
capital that cannot be replaced, nor done without. This has increased the scale of
losses to allocate, by a factor of 10 to 20.
The government is already the underwriter of the banking system. It is not equity
capital in the banks that is on the line if additional losses are allocated to the
banks. It is the depositors who would be annihilated. And governments have
guaranteed their deposits, and must pay if the banks fail. If a grand political
decision were taken to remove deposit insurance, it still wouldn't keep the loss
from falling on the government. Because the resulting chaos and loss to all
depositors would smash its revenues to atoms and increase the demands on it
many-fold.
The political-economic problem was and remains to “allocate” the loss. It cannot be
avoided, it has already occurred. It cannot be fobbed off on financial
institutions, which are mere intermediaries between the deadbeat borrowers on
mainstreet and the coddled depositors who lent to them, indirectly. You can change
which hat men are wearing - they can lose as taxpayers before the banks are
destroyed, or after to refund the FDIC, or as depositors, or through the smashing of
final demand and the overall economy. But the populist pipe dream to just make some
rich fat cat pay for it all, or the Dems dream to have uncle sugar do so, are
illiterate nonsense from start to finish, and do not understand how the financial
system is actually structured, or who the final claimants at risk, actually are.
Banking capital and credit market capital performs a necessary social function.
When it is destroyed, that function ceases. And as a result, no one can get access
to capital, unless the government steps in and deliberately gives it to them, ad
hoc. Destroying that capital did not spare the government from paying something.
It just multiplied the total amount to be paid by a large number. When Washington
Mutual failed, the FDIC was on the hook for $40 billion. They smashed the bond
holders instead, through a deal with JP Morgan that conveyed the assets away from
the liabilities of the company's holding company structure. This "saved" the
taxpayer $40 billion that day - and promptly closed the bond market to all banks.
To enable them to open the following week, the Fed had to jump in with oh a cool
trillion or two.
You cannot live off the seed corn. No one gets a dime until banking capital is
restored. Brown's failings, and they are serious, are emphatically not due to being
too soft on the banks and not letting enough of them fail. Quite the opposite, in
fact. Until authorities move heaven and earth to make it “profitable” to be a
banker again, instead of loading them down with populist brickbats, one, nobody gets
a dime and two, the government will be the only banker open.
None of the major banks can be allowed to fail. More, all of them need to be flat
given things until their share prices skyrocket. The government must work as hard
as possible to load losses onto the taxpayers for the benefit of financiers, or
there will not be any financiers. This can restore a profit motive to pushing in
the same direction as government policy, which at present does not exist. Only the
restoration of such a prospect of unearned, unmerited, entirely gratuitous profits,
merely for having the guts to stand up and be a banker at the moment when the whole
world is screaming for their heads, will end the financial side of this crisis.
Even that will not end the economic side of it. It will allocate the loss where it
must be borne, by the entire society especially those well enough off to pay taxes,
and stretching well into the future, at rates as low as possible one hopes. The
loss being allocated and the financial system functioning, are required to even
begin shifting capital from all its improper uses to currently sensible ones. The
government cannot do this. It will flail blinding shoveling capital at populist
wish lists and that will wreck the capital so directed without adding a dime of
value anywhere.
The government has to shovel capital at the financial system until people get the
brainstorm that the way to get filthy rich is to grab some of it by taking some
economic risks again.
Why does the government need to do this? As a pure, practical, financial matter, it
has no choice. Every other course will saddle it with epic ongoing costs as far as
the eye can see, with no prospect of any increase in revenue to meet any of it. But
restored economic growth, can readily pay for all of the above. Won't even hurt
anymore, a few years into growth recovery.
The entire political system continues to see the problem as one of shifting losses
onto some other set of shoulders. It isn't. It is to take the entire problem, lock
stock and barrel, onto its own shoulders, tell its citizens to go get rich, and then
wait for the 20-30% of their incomes those citizens pay back to it as ordinary
taxation, make up everything it paid out.
This is readily apparent to anyone who can add, looking at the financial markets.
Market participants will give money to the government at 0 to 3% interest, in any
quantity desired. They won't give money to sound corporations using it much more
efficiently, at 8, 10, even 15%. How does this persist? Answer, the capital that
would normally arbitrage a spread that wide has been destroyed. The government has
to arbitrage it, itself, by issuing a flood of treasuries and directly and
indirectly giving the funds thus raised to the companies that can't get it from
investors, right now.
Penny wise is pound foolish. In a crisis, the rule is to lend freely, saturate the
demand. When instead you try to starve it, force bankruptcies in the name of
"discipline", all you do it send total losses to infinity.
Jason Cawley
Boston, Massachusetts
INJECT CAPITAL BY CUTTING TAXES
In your NRO comment regarding David Gitlitz's response to your assertion that the first half of the TARP funds had been wasted, you quote him as saying (among other things) that "By injecting capital into the system, the TARP money relieved the worst of the risks confronting the system, unfreezing the credit markets."
If injecting capital into the system was the primary goal, is there some reason that abolishing corporate income taxes, capital gains taxes, and personal income taxes, while instituting a national retail sales tax (maybe 5% or so), would have failed to achieve that end? Given that the market is generally acknowledged as the best mechanism for allocating scarce resources, then removing disincentives to capital investment would seem the best way to harness market forces to end the credit crunch.
But I'm not a Congresscritter, so maybe there's some nuance that I'm missing...
Jason Bontrager
THE SPEED OF THE CRASH
I tend to agree with you on the TARP. David Gitlitz may be correct that we were facing a collapse of the global financial system. Yet there are two key points:
a) How much of the panic at that moment was created by the government itself by insisting that a collapse was imminent if government action was not taken? And once it was announced that some massive government action was pending, the only rational response of the markets was to shut down in
the interim.
b) At best we substituted an instant crash for a slow-motion crash. The big institutions are failing one-by-one - the TARP has done nothing to 'fix' their situation. Meanwhile the economy is sinking at an accelerating pace. Not much benefit from $350 billion.
While it would seem that some government action was required, it is equally clear that government has zero clue about what that action might be. It is also clear that the politicians would ultimately put petty interests ahead of addressing the actual problems.
Unless the economy self-corrects we will probably get both the Depression and more intrusive government.
Mark Lake
THE MONEY HOLE
I’m afraid that your suggestion today (“By common consent, the first $350 billion of TARP was completely wasted. Secretary Paulson might as well have ordered the Treasury to hurl it out the windows in dollar bills and watch it flutter down into the Potomac and out to sea.”) has been bested by The Onion.
David Straite
USEFUL AND NON-USEFUL EXPENDITURES
I suspect that objection to the TARP program can be summed up is a single generalization: Not all money is capital. Our same moral paralysis that prevents us from making distinctions regarding this culture or that, this religion or the other, etc., has seeped into our ability to discriminate among useful and non-useful expenditures of money.
It is of course anathema in intellectual circles to question the dogma that money is fungible, but in fact it takes but a moment's reflection to realize that the value of money does in fact depend upon how it is spent. The economy contains both sources and sinks of value, and a stimulus logically should direct money from the sinks to the sources.
To illustrate, some money is lost from the economy depending upon how it is spent. It is no longer available for the generation of wealth, or the procurement of desirable goods or services. On example would be money paid to a laborer who then sends it to relatives in a foreign country. As far as the U.S. economy is concerned, this is not capital. Another example would be the person who buries his money in the back yard, untouched until inflation has consumed its value. This likewise is not capital. Money spent on educating people to make buggy whips or siege engines is not likely to lead to the generation of wealth, nor by analogy, is that spent on educating an army of activists in "women's studies." Such expenditures are not capital. These are examples of money directed to the sinks in our economy. In
contrast, money spent on development and production of products that people find useful and desirable is capital; it is how wealth is built, and how money is given value; i.e. being exchanged for something that someone actually has use for. Activity that results in goods and services that people need and desire are sources of wealth in our economy.
Money lost to economic sinks is not capital. Money that is lost on gambling is not intended to lead to the production of desired goods and services, and so it is not capital. This is an important point, since many of the derivative "investments" that sank the mortgage markets were little more than bets as to future market directions, pretending to provide "liquididty" to useless markets. Of course, this was an
economic sink, and quite naturally led to the disappearance of fortunes.
In short, I wholeheartedly agree with your assessment that a big part of TARP disbursement was totally wasted. It simply freed up more money to excuse poor management and which was destined for for some deep and unforgiving drain.
J.B.
AS VELOCITY PLUMMETS…..
Dig up a chart of “monetary velocity”. If you do, you'll find that it's headed south at a rate frighteningly close to the vertical move in the monetary base.
In other words, the Fed has been expanding its balance sheet, etc. at a pell-mell pace, but it's accomplishing nothing. To use an old phrase, they're “pushing on a string”.
The need for cash to use to extinguish/service debt is so great (which by the way, is one of the primary reasons the $USD has held up so well; the other being that things are unraveling so fast overseas that the U.S. is becoming the “best house in a very bad neighborhood”) that it's overwhelming the Fed monetary creation.
Until that abates and velocity stabilizes and/or picks back up, there will be no economic recovery. And as for inflation, that's a potential story for 2012 or 2013, not right now (the gold bugs' protestations notwithstanding).
And besides, inflation is vastly preferable to deflation. The former is easy to snuff out. As we're finding out right now, deflation is a whole different can of worms.
Kevin Jones
… MONEY SUPPLY MUST EXPLODE
Your warnings about the growth of the money supply fail to take into account the concept of the velocity of money. Currently there has been a dramatic decrease in the velocity of money. Economic activity is a function of the supply of money and the velocity of the money supply. To focus on one without paying attention to the other paints a distorted picture regarding monetary policy. In order to keep the economy moving at even its currently recessionary levels requires an exploding of the money supply given the dramatic decrease in velocity. Please verify this information with an economist of your choosing but the Fed is doing what it can to fight the big downturn in the velocity of money by exploding the money supply. The challenge for the Fed will be drawing down the money supply when the velocity of money picks up to avoid another bubble.
Thomas M Brown
Re: Pussy Galore
CATSMEAT
Shame on Wallen Kinserra!
John
Re: From the Goons to the Colbys
MORLEY TRIBUTE
Thank you for your great little tribute to Angela Morley. I have a treasured 78 ca. 1954; "Teenager" and "Catwalk", two perfectly realized big band tracks of a dance then popular, "The Creep".
I won't deduct any points for your not getting "The Goons". I'm an elderly Brit and I was there.
Pity you're not still in "The Spectator". I might cancel my subscription.
W j Hillery
Re: Britain to follow Netherlands?
THE DUTCH ARE AN ORNERY LOT
Before we criticise the Dutch, we need to remember that there has been, to my knowledge, no politician in either the United States or Canada that has criticized Islam and particularly the Qu'ran in anything like the blunt and truthful way Geert Wilders has. What would happen in North America if a politician did so? He likely would not be silenced by a court. There wouldn't be time. Within a day or two,perhaps just hours, we would see that person on the CBC or CNN giving an abject apology to the adherents of the religion of peace and swearing never to repeat the grievous sin again.
The first amendment is there. That's great. But who has the courage to test its efficacy on this issue? So far, in the west, only Dutch politicians led by Wilders have had the courage to express what a great many of their frightened countrymen are feeling. Mark my word, millions of Dutch citizens applaud Wilders.
From personal experience I know the Dutch are an ornery and brazen lot and the rise of Wilders in that country is not all that surprising. Whether a groundswell of support materializes or if people have been browbeaten into submission to political correctness remains to be seen. The court action against Wilders may tell the tale.
Hermina Dykxhoorn
Calgary
HATE CRIME IN THE STATES
I hate to go to bat for Obama on anything, but there is a difference between using "hate" a sentence-enhancement factor and criminalizing "hate" itself. If Obama's going to crack down on crime by making punishment for hate-motivated crimes more severe than for the same crimes without a hateful motivation, then that's one thing. If he's going to move toward criminalizing speech or even thought with a hateful element, that's a different thing.
I don't mean to suggest that the two are discrete. I also think that it is questionable whether it's advisable to enhance the punishment of certain crimes based on motivation, especially when that motivation itself is presumably protected by the Constitution. Only the criminal act ought to be punished, and enhancing punishment of certain crimes may be a backdoor method of restraining the so-called marketplace of ideas. However, I'm not yet ready to mourn the death of the First Amendment if all Obama intends to do is to punish, e.g., murderers, batterers, and other miscreants who happen to say nasty things while they commit their heinous acts. After all, isn't being tough on crime a conservative "thing"?
Incidentally, the Supreme Court has approved sentence-enhancement hate-crime legislation as long as it does nothing more than enhance the punishment for conduct that is uncontroversially already a crime anyway.
Now, having said all that, I don't think everyone really "gets" the difference between sentence enhancements for already-illegal acts and pure restriction of speech and thought. Joe Biden, for instance, probably slept in on the day they discussed that in law school. I'm also worried at the vague language on the White House's site, and I know that a bunch of people probably think that hate speech should be illegal no matter what. Until it's more clear who's making what illegal, though, I'll give Obama all the benefit of the doubt I can muster.
I'm sure we'll find out, later on, that he's going to Canadaize our marketplace of ideas anyway, but I had to give him a chance!
Robert Carroll
YOU'RE A WHINING REAGAN TOADY
What is irony? A hack at a magazine organized around the deification of the Gipper whining about the popularity of the current president.
Of course, it follows in a proud tradition of "creative logic":
- You dislike Bush's policies? You are a horrible person who suffers a deranged hatred of poor ol' W.
- You think we should act with some responsibility with regard to the world and resources we leave to our posterity? Oh grow up, you moralistic hippie!
- You think Obama is a competent leader who may help steer us out of this ditch? Get a life, you mindless O-bot!
And so on, and so on. Please carry on, Mr Steyn and remember, it's not a lie if YOU believe it (that must be the credo at NRO!)
David B
LAST WORD
Just want to let you know that I really enjoy reading your columns. I do have one suggestion for your website. It needs to be a little less cluttered. There is too much going on. While there are times when more is more, this is one time where less is more.
Margarita Paul
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