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Karl Rove says now Obama has to govern.
Presidential transitions can be problematic. The candidate is utterly exhausted. Supporters have unattainable expectations and unrealistic personal hopes. The ease of making campaign pledges has given way to the obstinate process of legislating them. And Barack Obama is the first president-elect since Richard Nixon without executive experience. What are some of his transition challenges so far?
One of Mr. Obama’s first decisions was to make Rahm Emanuel his chief of staff. This smart, aggressive Chicago pol may turn out to be a wise pick. But first he must decide what his role is. Will he be the opinionated enforcer who ran the Clinton White House political office? Or will Mr. Emanuel fashion himself into a more traditional chief of staff? …
Cafe Hayek blogger and economist Russell Roberts answers the question, “You’re so smart, how come you didn’t see this coming?”
… Having said all that, when home ownership went from 64% to an all time high of 69%, I foolishly attributed it to our growing standard of living and Wall St. innovation. I was right about part of it. We do have a growing standard of living (contrary to the claims that the average American isn’t sharing in the economy’s expansion) and Wall St. innovation did reduce the risk of lending to people who otherwise wouldn’t have gotten a loan. But I, like others, didn’t see the unsustainability of that rise. And most people thought that if the rise slowed or fell, then some people would lose their houses and others who invested in those mortgages would lose their money. We didn’t see the systemic risk. We didn’t pay enough attention to the magnitudes. Prices are unlikely to double in ten years solely because of fundamentals. The explosion of subprime securitization in 2004 and 2005 should have set off alarm bells.
A deeper question that I have not seen adequately answered is why people who specialized in the housing market, people who were paying attention, people who put their life’s wealth on the line, were equally oblivious. What were they thinking? That housing prices would keep doubling? Or just keep going up? Were they comforted by the AAA rating of the CDO they had purchased? The credit default swap they had purchased? Should that have been enough? The standard answer that they were greedy is not an answer.
Which brings us to another reason I and others were silent in 2005. Financial markets are incredibly complicated. Even today, ex post, it’s hard to know what really happened that spiraled downward so dramatically. There are a lot of culprits. The ratings agencies. Fannie and Freddie. Greed. Innovative products that were too complicated to understand. Tax policy. Monetary policy. Mark-to-market accounting. How do all of these effects interact? The ex post story isn’t straightforward. Ex ante is much much harder. …
John Stossel says Paulson’s flips are typical of government attempts to do anything.
Is the stock market trying to tell us something? It seems like every time Treasury Secretary Henry Paulson goes on TV, stock prices drop.
I can see why. Businesses would be reckless if they made investments that might lead to recovery when they have no idea day to day what Paulson or his successor might come up with next.
By my count, Paulson is now on his third plan for how to spend the pile of cash Congress gave him.
First he was going to buy “toxic” mortgage-based assets from banks.
A few days later, taking his lead from the Europeans, Paulson decided that some of the money should be used to buy stock in banks, both healthy and ailing. Let’s put this plainly: The Treasury, on its own initiative, decided to partially nationalize the nine largest banks and many smaller ones. They would be given no choice in the matter on the logic that voluntary participation would stigmatize the participants. Direct big-business socialism had come to America.
Now Paulson says he doesn’t want to buy the toxic assets from the banks.
Huh? …
A post at Volokh Conspiracy on the auto bailout.
I have hesitated writing about the GM bailout for two reasons. First, I like GM cars; I bought two of them in March, and every car I’ve ever bought was a GM car. Second, a professor with tenure should be somewhat circumspect in writing about the jobs of people who do not have the protections that we have.
But in watching CNBC debates on the Auto Bailout, I have been frustrated by the arguments of those who favor bailouts that government largesse will on balance lead to more employment, rather than less.
Those inclined against the bailout seem mostly to say, “When will the handouts end?”
Yet the best way to meet the “jobs argument” is with another jobs argument. Making bad, uneconomic investments in failing industries does not, on balance, preserve jobs; it tends to destroy more jobs – and more good jobs – than it saves.
If you give money to failing industries to save jobs, then you are probably taking even more jobs away from other industries who would hire or retain workers but for their higher expenses. In essence, throwing money down a hole may preserve jobs in the short term but should lose jobs in the medium and long term.
If you pay for an auto bailout with today’s tax money, then over the next couple years you are taking jobs away from lots of people currently working. …
Jennifer Rubin says the bailout has died, but only for a typical Washington reason.
Unfortunately, Washington operates in sound bites and symbols. The good news is that those sound bites and symbols occasionally shame Congress into doing the right thing. That seems to have happened with the auto bailout.
Columns and columns have been written, cogent arguments constructed, and plenty of good advice rendered to the effect that a bailout is misguided, and that only a bankruptcy proceeding can provide the legal mechanism needed to restructure major American automakers. But it took a boneheaded move by the Big Three CEO’s–flying to D.C. in private jets–to galvanize the media and make it virtually impossible for the Democrats to throw away billions more on recalcitrant, failing companies. …
Walter Williams exposes the evil in socialism.
… I don’t believe any moral case can be made for the forcible use of one person to serve the purposes of another. But that conclusion is not nearly as important as the fact that so many of my fellow Americans give wide support to using people. I would like to think it is because they haven’t considered that more than $2 trillion of the over $3 trillion federal budget represents Americans using one another. Of course, they might consider it compensatory justice. For example, one American might think, “Farmers get Congress to use me to serve the needs of some farmers. I’m going to get Congress to use someone else to serve my needs by subsidizing my child’s college education.”
The bottom line is that we’ve become a nation of thieves, a value rejected by our founders. James Madison, the father of our Constitution, was horrified when Congress appropriated $15,000 to help French refugees. He said, “I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents.” Tragically, today’s Americans would run Madison out of town on a rail.
Brent Bozell doesn’t think National Review needs croc tears from the NY Times.
The liberal crocodiles at The New York Times are shedding tears for National Review magazine. The headline of media reporter Tim Arango’s piece is “At National Review, a Threat to Its Reputation for Erudition.” It is a curious topic for the Times, which usually treats the idea of intellectual conservatism as oxymoronic.
Arango mourns that the tenor of debate at National Review Online, the magazine’s Internet sister, “devolved into open nastiness” over the question of Sarah Palin’s fitness for the vice presidency, “laying bare debates among conservatives that in a pre-Internet age may have been kept behind closed doors.” Arango claims that the coarsening effect of the Internet has damaged NR’s “reputation as the cradle for conservative intellectuals and home for erudite and well-mannered debate prized by its founder, William F. Buckley Jr.” [Full disclosure: my uncle.]
Such tender concern for the fate of the conservative movement and its leading periodical is almost amusing, given that the Times spent decades savaging the magazine’s founder. …
News Biscuit says Disney enhanced authenticity by hiring a bunch of Somali’s for its Pirates of the Caribbean ride.