Category Archives: View

View 687 Wednesday, August 10, 2011

Productive day, but not for this site. Went up the trail to Mulholland with Niven and Sable. Productive hike, discussed the book with the working title of Lucifer’s Anvil – that won’t be the published title I think – including just what we are trying to accomplish. The story is not hard but the way of presentation is difficult; there will be a lot of tell, not show, and the telling will be interesting only if those telling it are. Very productive discussion. Went to lunch afterwards, took a nap, and worked on the book, pretty well using up all my energy.

It was a good day.

Not such a good day for the market or the rest of the world. I’ll have some notes on that in mail.

I note that the Federal government managed to put together a raid on an organic food outfit that sells only to selected customers who know precisely what they are buying, and dumped 800 gallons of raw milk that no one claimed was contaminated: but it wasn’t licensed. Your Deficit Dollars at work. We had to borrow money from the Chinese to protect you from that raw milk and all those vegetables.

View 687 Tuesday, August 09, 2011

· das Wirtschaftswunder

· A Small Proposal that Might Work

· Going a Bit Further with Reform

· Fallen Angels with Afterword available

Regulation Control

We know the keys to economic growth: cheap energy and a free economy. Actually that boils down to one key, since a free economy would result in a rapid fall in energy costs. Imagine, for a moment, that the government announced the end of all Federal regulations for ten years. State laws still apply. The laws against fraud still apply. But all other regulations – Americans with Disability Act, OSHA, EPA, all of them – simply do not apply for a decade. The result would be an economic explosion that would outshine the German Economic Miracle, das Wirtschaftswunder, that followed the elimination of economic regulations and controls in occupied West Germany after World War II. (Note that East Germany remained under Soviet occupation and followed the Socialist path; the Germanies were united after 1989, and East Germany is only now recovering from its years of socialism).

A ten year moratorium on all Federal economic and environmental regulations – leaving all that to the states – would bring about an American economic miracle. It would take a year or two for the states to begin to compete in offering free economic environments, although some are already in a pretty good position that way, but just the anticipation would produce dramatic effects.

Of course this isn’t going to happen. It wouldn’t happen even if 80% of the American people wanted it. The government isn’t structured to respond to such things. What would all those Federal employees who are now employed enforcing those regulations do? What would the Bunny Inspectors do? Why would we need SWAT teams to enforce regulations that are no longer being applied? The whole think is ridiculous, which means that we will continue to enforce the present system even as it chokes us to death.

Is there a solution, short of turning out every member of Congress and replacing them with people drawn at random from the taxpayer rolls? I guarantee you that if Congress were elected only by people who have paid more than $500 in income taxes in the previous year we would have a lot more economic freedom. The only thing worse than taxation without representation is taxation with representation in which the people represented are entitlement consumers rather than those obliged to pay for those entitlements. If you think things are bad now, wait until we are forced to have a “balanced” solution to Deficit Reduction: recalling that the President has already announced that we have made all the cuts we can make, so the balance will have to be by raising taxes. We haven’t seen the last of the Deficit Dance.

But note that none of the proposals for reducing the Debt seem to involve economic freedom. The US has more than enough energy resources to spark the energy part of a new economic miracle. Of course we haven’t built a new refinery in what, twenty years? Solving those problems are easy. Drill, baby, drill. Approve the pipeline from Canada. Get out there and frack. If all that were done with the urgency with which we responded to Pearl Harbor, we’d be out of the energy crisis in a year or two. Why is no one discussing that remedy? Which, by the way, certainly would produce some revenue; there’s no reason at all why there should not be taxes on oil and natural gas production. But again that’s another story. The point here is that we aren’t even discussing reducing the Deficit by producing more energy domestically and thus avoiding sending hundreds of billions to the Middle East.

Nor, so far as I can tell, were any of the Plans presented in the Deficit Dance concerned at all with permanent or temporary deregulation. OSHA, Americans with Disabilities, Rabbit Protection , all kinds of EPA regulations: none of them suspended nor was there any discussion of suspension. Economic freedom simply is not an item for discussion in these great master plans.

What Can Be Done?

There is one very simple thing Congress can do almost instantly that might have a dramatic effect on economic growth. We have already in place regulation exceptions for small businesses. Some are for businesses with ten or fewer employees. Others apply if your business has fifty or fewer. There may be exceptions for those with 100 or fewer, although I am not sure of that.

My proposal is simple: double the exception numbers. Regulations that apply only to businesses with more than ten employees now apply only to those with more than twenty. Those that apply to more than fifty now apply only to those with more than a hundred. Etc. The effect would be to let successful small businesses expand easily. Those that have been making do by using part time employees can now let them become full time. Regulations would remain in place, but now they apply to fewer businesses. This would take effect immediately and be in place for ten years.

I suspect that the effect would be dramatic. Possibly it would not, but it isn’t going to hurt the economy, and who knows, if that produces economic growth and job creation, it might cause our masters to consider changing the darned regulations.

Going Further

I’d go further. I’d do the exception for small businesses, but then I’d suspend all regulations, that to take effect in one year. During that year a bi-partisan commission would specify which regulations we just couldn’t get along without, outlining why they were important enough to be enforced in a time of economic crisis. Each and every one of that darned things would have to be specified: Federal licensing of stage magician rabbits; protection of endangered species; occupation health and safety; disability acts such as not allowing an employer to fire drunks because alcoholism is a disability; FDA insistence on effectiveness of drugs as opposed to insisting on proper labeling and safety; minimum wage acts; Federal environmental regulations; all of the thousands and thousands of pages of regulations. In each case there would have to be specification that this needs to be Federal, and cannot be left to the states; and specification that it is urgent and there would be great harm from not enforcing this now even during an economic crisis.

Every member of the commission would have to sign the specification. The name would be on record. The specification would not merely say that, say, Federal licensing of stage magician rabbit keeping is a nice thing to do, but that it is something that urgently needs to be done in dire economic times, or that some EPA specification that adjusts the allowable amount of a substance down because we have discovered a more sensitive means of detection although there is no evidence whatever that the level change has any effect on health; that sort of thing. Any of the regulations and crazy laws that the commission did not certify with specification of urgency would be suspended for ten years. Any regulations overlooked that urgently needed to be restored could be restored by a majority vote in each house, but the vote would have to be a single item vote – they could have a hundred in an hour, but it would still be a single item vote – with the yeas and nays recorded.

Of course this won’t happen. We’ll still have Bunny Inspectors for decades. Some people will make a lifetime career of pursuing stage magicians to be certain they have a federal license to use rabbits in their stage shows.

But wouldn’t it be nice?

Meanwhile, I am dead serious about doubling the exemption levels. That wouldn’t produce a miracle, but it would be a long step in the right direction; and it might get people thinking about why have the regulation at all. I’ll repeat the proposal: businesses exempted from Federal regulations by reason of having fewer than some number of employees are now exempted until they have double that number. To take effect immediately. That could be get through Congress in a week after they get back from vacations.

All of you going to town meetings should think about proposing it. If it gets enough suggestions, who knows what might happen. I see no reason why it should not be adopted. If we can live with the effect of a suspension for businesses with fewer than 10 employees, the Earth will not tremble if we raise that exemption to twenty.

I was going to write an essay on real budget cuts, but I got this today, and it saves me the work:

Real cuts

It’s disappointing that real cuts seem impossible even to debate. Perhaps if the public were more fully aware of the magnitude of the issue, more could be done. I’d love to see a series of interviews, press conferences, and ads promoting the idea of simply returning to the worst over-spending of the Bush years.

It would be easy enough to show many people stating that the Bush spending was unreasonably high; that can be agreed on. Anyone, in either party, who agrees that that’s too much can say so. Anyone who supported it then but sees it as a mistake now, can apologize. Yet any proposal to take us there would be portrayed as a "draconian cut."

That level of spending is not ancient history; it should not be inconceivable to go back to it. Write a full budget that takes us back to it in one year. Start working on it as soon as possible, and promoting it early and often. It may be reasonable to make concessions to higher spending (adding the increases to interest on the debt, increases due to population or inflation, etc.), but it would make a wonderful starting point for negotiations in the first year, perhaps fully bringing us back to that spending level in, say, two or three more years.

Beyond that, many people at the time (myself included) saw the spending of the Clinton years as too much; but it’s widely praised as the best times the country’s ever seen. So, set as a goal returning to that (with flexibility on adjustments for inflation, the aftermath of 9/11, etc.), within a decade or so.

Those would be real cuts. And they’re well within living memory for the vast majority of the electorate. But it seems that any real cuts need to be explained clearly and repeatedly, to a wide audience, or else they can be successfully demagogued as cruel and heartless.

And when asked how we can get there, perhaps supporters can start off by citing the Federal Bunny Inspectors.

Thanks for your site. It’s the one I miss most when I’m away from the web for a few days.

—

Steve Carabello

Of course you already have accepted that the Federal government is too large and ought to shrink; as I have (and did back in Reagan’s day). Next Fall’s election will be a national referendum on that proposition, or should be. And can be if we insist. Should the government grow at 5% compound interest rate or shrink at 1% compounded? I’d love to just put that to the people.

Fallen Angels

Amazon has announced that all who bought the older edition of Fallen Angels that lacked the Afterword by Niven, Pournelle, and Flynn can now go to the “Manage Your Kindle” page and arrange to download the updated copy free. They have sent notices to that effect, but your spam filter may have eaten that. If you haven’t bought Fallen Angels, this is a good time to do it. The book is still relevant.

View 687 Monday August 08, 2011

· Bill Gates, Education, and things not discussed.

· Black Monday: more Deficit Dancing

· Anti-Matter?

· A Requiem for Shuttle and the end of America’s Manned Space Program

Gates on Education

Bill Gates on Education: "[E]very student needs a meaningful credential beyond high school"

Bill Gates’ prepared remarks for the National Urban League, 28 July 2011:

http://www.thegatesnotes.com/Topics/Education/National-Urban-League-Speech

Rod Montgomery==monty@starfief.com

It’s an interesting speech given where it was presented. Gates still does not address the Lake Wobegon problem. No one does.

What is the key inequity in this country? What is the pivotal issue for the future? For us, the answer is education. Education is the great equalizer.

Yet perversely, the great equalizer in America is stained with inequality. Our public schools range from outstanding to outrageous. And where a child’s school is located on that spectrum is a matter of luck – where you live, when you were born, who your parents are. There is already enough in life that depends on luck. When it comes to education, we should replace luck with equity.

Yet that was not universally true when I was young. There were places with great schools – many districts in California were held up as examples – and places with wretched schools, but none of that depended on luck, because each school district was responsible for education. No one thought that education in the United States was universally awful. Moreover, the resulting economy built by the products of that education system dominated the world. American Know-How was a cliché, but it was a cliché because it was so obviously true.

That has all changed in my lifetime, and the consolidation of education into state and federal monopolies with their complete control over local districts has produced what we have now: a great inequity. I used to say that there were three institutions of enormous importance built on central control: NASA, the American Education System, and the Soviet Agricultural System. All of them could show some spectacular results in particular times and places – massive central planning can often do that – but they were all notoriously inefficient systems of resource allocation. NASA and the Soviet Agriculture System are gone. It’s not clear what will replace NASA; without a great improvement in the US economy, probably nothing. And without a great increase in the capabilities of the US education system, the economy isn’t likely to boom again. We need more American Know-How – and we don’t have it and have little prospect for getting it.

Let me acknowledge that I don’t understand in a personal way the challenges that poverty creates for families and schools and teachers. I don’t ever want to minimize it. Poverty is a terrible obstacle. But we can’t let it be an excuse. Melinda and I have been involved in some remarkable schools that prove that all students can succeed. We know you can have a good school in a poor neighborhood. We’ve seen them and been inspired by them, and so have you.

So let’s end the myth that we have to solve poverty before we improve education.

It’s the other way around. Improving education is one of the best ways to solve poverty.

The first step in reforming anything is to find out where that thing is being done well – and why. When our foundation studied the highest-achieving schools, especially the schools where poor children were doing well, we found mounting evidence that the single most important factor in a successful school is effective teaching. Data now show that students with great teachers learn three times as much material in one year as students with ineffective teachers.

This is an important finding. It has generally been known or at least suspected – see Barzun on the subject as well as some of my previous writings – but it hasn’t been widely accepted among professors of education. Perhaps now it will be.

The impact of the teacher is pivotal. BUT – that does not mean that parents, principals and administrators have fewer obligations. It means they have greater obligations … to support teachers — to provide them with the training and the college-ready curriculum and the resources they need to help their students.

To truly support teachers, we have to understand excellent teaching. So for us, the challenge became: let’s analyze the teachers whose students are making the biggest gains, identify what they do, and figure out how to transfer those skills to others.

Amazingly, we found that the field of education had done little research in this area. It knew the impact of effective teaching, but it didn’t know what made teaching effective. This gap in knowledge was disappointing, but at the same time it made me optimistic – because it confirmed that the field was now onto something that had been missed.

So our foundation is working with teachers to identify measures of effective teaching – and then develop ways to evaluate teachers that teachers themselves believe are fair.

This too is important.

Note that Gates does not directly address two key issues in schooling. He says that education is a civil right; he does not say or address the key question of equality in education. Injustice consists of treating equal persons unequally, and of treating unequal persons equally. Half the children are below average. Those below average will not benefit from a college education meaning that they will not greatly benefit from a world class university or college prep education. Gates doesn’t address this, and I don’t much blame him. It’s one of the best ways to be blackguarded as a racist.

The other issue Gates does not address is discipline. Schools that benefit from his foundation’s help generally don’t have discipline problems, because there are generally more applicants for places in those schools than there are seats for students. Undisciplined students either learn some self discipline are are replaced with others who do that learning.

The public schools are filled with students who don’t want to be there. There is no simple way to impose discipline on them under our present structure. That is a problem that is seldom addressed, and most attempts to impose discipline on unruly students are met with lawsuits and accusations. This results in inequities: students who want to learn find themselves unable to learn anything because the classroom is disorderly, and nothing can be done about that. The kids who want to learn – bright nerds, dull plodders alike – are taxed. We have known much of this for a very long time – go rent Blackboard Jungle (a 1955 movie in which my former neighbor Jamie Farr makes his film debut). Local school districts treated the problem in different way, but we have nationalized that now, and with No Child Left Behind we have made certain that most of the teacher resources will be devoted to the dull normal members of the class who can be brought from D- to C-; not much left over for those who will earn A’s and B’s. No child left behind means no child gets ahead. Nearly always.

Gates and his foundation have done good work, and he is politically savvy enough to go very slowly in promoting the notion that excellent teachers ought to be recognized and rewarded; it’s an idea that the Education Establishment from the Professors of Education down to the Teachers’ Union officials just plain hate. Gates has avoided most of the hatred, largely by not addressing the injustices of inequality: all teachers are not equal, yet they are treated equally; and all students are not equal, yet they are treated equally. This is injustice. It’s also a lousy way to run a school system, and I would bet a lot that the Gates children do not go to a school that tolerates undisciplined students or treats all students equally; or for that matter treats all teachers equally.

Black Monday

I want to get off the Deficit Dance, but the subject has to be addressed.

The Dow is down 500. In the past two weeks over two Trillion dollars in capital has vanished. How much of that is due to the Deficit Dance is hard to discern. The President spoke today to tell us how to get out of this mess. It requires that we balance the budget. We have to reduce the deficit. That requires a balanced approach. Balance means tax rises and spending cuts. The problem is that we can’t make any more spending cuts. We put those in the Deficit Agreement. Here is the President:

One vision has been championed by Republicans in the House of Representatives and embraced by several of their party’s presidential candidates. It’s a plan that aims to reduce our deficit by $4 trillion over the next ten years, and one that addresses the challenge of Medicare and Medicaid in the years after that.

Those are both worthy goals for us to achieve. But the way this plan achieves those goals would lead to a fundamentally different America than the one we’ve known throughout most of our history.

A 70% cut to clean energy. A 25% cut in education. A 30% cut in transportation. Cuts in college Pell Grants that will grow to more than $1,000 per year. That’s what they’re proposing. These aren’t the kind of cuts you make when you’re trying to get rid of some waste or find extra savings in the budget. These aren’t the kind of cuts that Republicans and Democrats on the Fiscal Commission proposed. These are the kind of cuts that tell us we can’t afford the America we believe in. And they paint a vision of our future that’s deeply pessimistic.

It’s a vision that says if our roads crumble and our bridges collapse, we can’t afford to fix them. If there are bright young Americans who have the drive and the will but not the money to go to college, we can’t afford to send them. Go to China and you’ll see businesses opening research labs and solar facilities. South Korean children are outpacing our kids in math and science. Brazil is investing billions in new infrastructure and can run half their cars not on high-priced gasoline, but biofuels. And yet, we are presented with a vision that says the United States of America – the greatest nation on Earth – can’t afford any of this.

It’s a vision that says America can’t afford to keep the promise we’ve made to care for our seniors. It says that ten years from now, if you’re a 65 year old who’s eligible for Medicare, you should have to pay nearly $6,400 more than you would today. It says instead of guaranteed health care, you will get a voucher. And if that voucher isn’t worth enough to buy insurance, tough luck – you’re on your own. Put simply, it ends Medicare as we know it.

http://tpmlivewire.talkingpointsmemo.com/
2011/04/text-of-president-obamas-speech-
on-deficit-reduction.php

That speech was made on April 13, but today’s speech sums to the same: there aren’t any cuts to be made. A balanced approach means tax raises. We have to reduce the deficit and we can’t do it by actual cuts in spending.

“The fact is, we didn’t need a rating agency to tell us that we need a balanced, long-term approach to deficit reduction. That was true last week. That was true last year. That was true the day I took office. And we didn’t need a rating agency to tell us that the gridlock in Washington over the last several months has not been constructive, to say the least. We knew from the outset that a prolonged debate over the debt ceiling — a debate where the threat of default was used as a bargaining chip — could do enormous damage to our economy and the world’s. That threat, coming after a string of economic disruptions in Europe, Japan and the Middle East, has now roiled the markets and dampened consumer confidence and slowed the pace of recovery.

“So all of this is a legitimate source of concern. But here’s the good news: Our problems are imminently solvable. And we know what we have to do to solve them. With respect to debt, our problem is not confidence in our credit — the markets continue to reaffirm our credit as among the world’s safest. Our challenge is the need to tackle our deficits over the long term.

“Last week, we reached an agreement that will make historic cuts to defense and domestic spending. But there’s not much further we can cut in either of those categories. What we need to do now is combine those spending cuts with two additional steps: tax reform that will ask those who can afford it to pay their fair share and modest adjustments to health care programs like Medicare.”

http://www.theroot.com/buzz/obama-us-always-will-be-aaa-country

And there we are. The only way out is to raise taxes. It will be called tax reform, tax those “who can afford it to pay their fare share”, but it will be tax increases.

The President did not explain why, if he knew from the day he took office that we needed deficit reduction, he didn’t do something about that when he had Democratic majorities in both Houses, Nancy Pelosi as Speaker, and pretty well all the power he needed to give us a budget that reduced the deficit. Instead we got TARP and STIMULUS and much more deficit spending, and the Democrats used their lame duck session majority to give us ObamaCare, which will certainly increase the deficit although it is not yet clear by how much. I note that there was nothing in the speech about ObamaCare or what the Democrats did with their two years of majority in both Houses.

But it is clear: the President does not intend to allow actual cuts in spending. It is important that the exponential growth of government spending shall be at least 5% and preferably more.

Yesterday I said that the downrating from AAA to AA+ by one rating agency wasn’t important.

Clearly the stock market did not agree with me. I note that Donald Trump does. Trump and others point out that most American companies are sound, and smart people are using this plunge as an opportunity to buy low. Gold is up. Stocks are down. Who knows what will happen in a year. It’s another reason why I try to avoid breaking news.

And there is plenty of other news worth looking at.

I also recommend the information in the charts in  this commentary.

ANTI-MATTER ?!?

This is news; if it be true it is astounding:

http://www.heraldsun.com.au/technology/sci-tech/scientists-find-anti-matter-trapped-in-van-allen-belts-that-could-fuel-a-spaceship/story-fn5iztw3-1226110997711

I have no other information on this. I invite comment from those who do.

A requiem for Shuttle.

If you can listen to these without crying, you probably should not be reading this site.

http://www.youtube.com/watch?v=eGi2Nt-GTF4

http://www.youtube.com/watch?v=Y3sHQioFobo&feature=related

http://en.wikipedia.org/wiki/Julia_Ecklar

View 686 Sunday, August 07, 2011

This is my birthday. Thanks to all who sent me subscriptions as a present.

Mission Accomplished

The mission had been completed. The Rangers had taken the objective, and the special forces were called in to complete the mission. That was accomplished and the team was on its way out.

The enemy was experienced in operations against helicopter forces, and had assembled all their troops possessing RPG’s to cover and concealment about 500 yards from where the Chinook was loading up. Their fire discipline was excellent. They lay in wait, mostly undetected.

Twenty two Seals, Three USAF Ground Combat Controllers and a dog handler with his dog, Four Tennessee Army National Guard pilots and crew, and eight Afghan Commandos were loaded aboard, their mission finished. They were on the way home. As the Chinook rose – slowly at first – the RPG’s fired, probably in volley. At least one made a critical hit. The Chinook went down from a height of more than a hundred feet. All aboard were killed.

Of course I am a fiction writer, and the scenario above has been constructed after I spoke with people who know something of the situation. It’s a guess. I am giving away no tactics: the Taliban has employed this tactic since the days of the Russian occupation – indeed we may have taught it to them.

The media news seems to be asking why the Pentagon has not sent grief counselors to console what the media seems to believe is a crippled legion. I have a different view.

I would not care to be a member of the Taliban in that district this month.

The Credit Rating Fandango

The credit rating change (by one rating company, from AAA to AA+) means nothing, but it does give people like former Presidential Chief of Staff Rahm Emanuel an opportunity to blast the Republicans and blackguard the Tea Party for its intransigence on taxes. It’s a new opportunity to make the argument: fairness requires more entitlements. More people ought to be given more benefits. Taxes on the American middle class are already too high. Without higher taxes we are already going into debt with growing deficits. We can’t balance the budget on the backs of the poor – we can’t cut their benefits which is like raising their taxes. Therefore it follows as the night the day that we have to raise taxes on the rich. That includes any corporations making profits, particularly obscene profits. We also have to eliminate the sweetheart tax loopholes, like the deduction for mortgage interest. Mortgage interest is paid by those whose houses haven’t been foreclosed already, meaning that those people paying it must be richer than those who have lost their houses or don’t own one; so by a kind of Morton’s Fork it must be true that they can afford to pay more taxes to support the government.

And of course we can’t balance the budget by cuts. We could cut needless programs like Bunny Inspectors, but that would be such a trivial reduction in the Deficit as not to be worth bothering with.

And if we can’t cut something as silly as Bunny Inspectors, can we cut anything? It is interesting that any proposal to do something as obvious as eliminate silly and clearly needless programs is resisted furiously; probably because once we start cutting, it becomes easier. Once we can eliminate some programs, and actually make real cuts in others (not just cut back on the rate of increase, which is called a Cut in the curious language of finance) the game actually changes.

So the credit rating change will be used as a club to beat the Tea Party; but it ought to be seen as a warning. The United States is not in danger of defaulting on its debts: it retains the ability simply to print enough money to pay them off. The danger is not default, it’s inflation. Coupled with increased unemployment. That’s called stagflation, and we had it good and hard during the Johnson Administration. I wrote several papers on it back when I was running the Pepperdine Research Institute. I don’t seem to have any of those now. I rewrote some of them during the Carter Administration, and Reagan and some of his advisors read them; perhaps they had an effect.

The formula for stagflation is increased deficit financing leading to inflation coupled with stifling regulations that prevent the creation of new jobs. We seem to be on track for stagflation.

Note that Canada was in this situation some years ago, and decided to get out of it by cutting spending. Drastic cuts in spending. The Canadian dollar is now worth more than the American dollar, which is startling for those who grew up before 1990.

As to credit ratings, these are the ratings given by the companies which by law had to approve the Credit Default Swaps that fueled the housing bubble and whose collapse got us into the Depression – oops – Great Recession we’re in now. Their predictive abilities particularly in recognizing bad bets do not inspire a great deal of confidence. Of course the United States will pay its debts. That’s not in question. Just what it pays them with can be another discussion. I don’t think the credit ratings reflect that.

The news chatters about the possible wave of financial collapses starting with the Nikkei just about now (1600 PDT Sunday) and spreading across the Asian market, resulting in a collapse of the NY York stock market Monday (tomorrow) morning; all that in reaction to the downgrading of the US credit rating from AAA to AA+. For most of you whatever is going to happen on that will already have happened by the time you read this.

I don’t do breaking news, and I’m just as confused about that as the rest of the talking heads. I am pretty sure that your interest income will be taxed, and if you are paying off a mortgage and your house hasn’t been foreclosed on, they’ll raise your taxes by closing the “loophole” of mortgage deduction. Our answer to that here at Chaos Manor has been to remove some money from money market accounts and pay off our mortgage entirely. It seemed like the right idea. I don’t see interest income going up or taxes on interest income going down, and the thirst to tax all those who haven’t lost their homes to foreclosure seems insatiable; the Democrats are certain that homeowners will not catch wise. We’ll see. But that was our bet.

Incidentally, in case you are wondering, I continue to point to Bunny Inspectors because until we come up with a mechanism to eliminate something that so obviously needs to be eliminated, I am not sure we will come up with a mechanism to eliminate anything else. Certainly the Super Congress Committee won’t bother with such trivia. It’s not clear that it will cut anything at all. It’s more likely to raise revenues by “eliminating loopholes”.

The credit ratings ARE important because any number of pension and other funds are mandated by law to only invest in AAA –rated bonds.

These funds will have to sell – or the laws will have to change.

Larry

The ratings agencies, which demonstrated their competence by giving great ratings to Credit Default Swaps and the crazy bundled mortgage packages that made it impossible to determine who owned what, and rated high risk loans up there near Treasury Bonds, have power only because Congress gave it to them. What Congress givether Congress may take away – or give to a new ratings agency that magically restores AAA.  Unless of course there is some advantage to a lower US credit rating. It is a Fandango. The United States is not going to default on its debts, and the credit rating agencies can’t really force real cuts in spending. It’s going to take new elections to do that.

Stability and National Security

For anyone interested, one of my old Pepperdine Research papers is available here. It’s in a very muddy pdf format (it appears to be a pre-Xerox copy of the typewritten original) of a paper on Strategic Stability. The report was presented (by me) in a report to the Air Council, and was used at the USAF Academy, in the Air War College, and in some of the strategic policy debates between the Arms Controllers at the State Department and the defense intellectuals of the Pentagon. Eric has been working to clean up the paper so that we can get a clean and readable copy; I’ll make a few comments on the concept now that the Cold War is over (the principles are much the same, and boil down to this: if you want to have peace you have to keep it; a principle that hasn’t changed since Athenian times). The goal is to put it out, readable with some comments, probably for $0.99 on Kindle. I’d make it free, but frankly it will be more widely distributed if it’s on Kindle, and Amazon won’t do that for free. I think this paper is worth the effort to make it available.