Up Until February 2010, Sarah Palin Was A TARP Republican

Many have pointed out Gov. Sarah Palin's hypocrisy on the bailouts, especially after her book Going Rogue appeared in late 2009, which codified her support of the extraordinary measures of 2008. I documented her statements supporting the bailouts, here and here.

With a speech in February 2010, however, she made news not just because she chose to give the speech in a Tea Party venue instead of at CPAC, but because she basically flip-flopped on the issue of the bailouts just months after her book had appeared.

Someone had straightened her out in the interim.

I'm actually not surprised by this shape shifting behavior, but it disqualifies her in my mind as much as the same sort of flip-flopping disqualifies a Mitt Romney or Tim Pawlenty, or even a Rick Perry. Turning currents seem to sweep people one way and then another regardless of gender these days.

The trouble, however, is that Bush was for TARP, Paul Ryan was for TARP, Nancy Pelosi was for TARP, John Boehner was for TARP, Sen. Reid was for TARP, Sen. McConnell was for TARP, Sen. Obama was for TARP, Sen. McCain was for TARP, and so was Sarah.

They're all responsible for interfering deeply and dangerously with the free exercise of the markets at a critical time when we most needed our leaders to trust in the ability of capitalism to prove its superiority to socialism, to fascism and to communism. And they all blinked.

It was a horrible failure of nerve. Many acted out of fear. And many acted out of fear of the money they would lose.

The latest speech in Iowa yesterday is a diatribe against the bailouts, against crony capitalism, and against the entrenched interests in Washington, DC. You can read the full transcript here and make of it what you will.

It doesn't mention the banks or TARP per se, just "big finance" and Wall Street. That the public/private nexus of banking is at the heart of the mortgage debacle is nowhere in evidence, which inspires zero confidence that Sarah Palin knows anything about the correct way forward. 

As a solution to our many problems the speech expresses a naivete about human nature which would be breathtaking if it came from an actual statesman, say, a Margaret Thatcher. In point of fact, Sarah Palin is as sanguine about the prospects of cleaning house as Barack Obama is about perfecting our union. Just get a new team in there and make them accountable, that'll fix it.

As if there are human beings in our world who are not corruptible. 

If we really wanted a resurrection of the spirit of the founding era, it would begin with a deep suspicion of human nature and a construction of policies and institutions meant to check it as a matter of first importance. Republican enthusiasm to overturn Glass Steagall was an expression of the opposite. As a Christian Sarah Palin should know better.

As it is, the notion that good and evil dwell mixed up together in each of us might as well be an item of organic chemistry, Latin grammar or Greek philosophy. It is incomprehensible to the current generation who seem to retain boundless faith in the essential goodness of human nature, or at least of the human nature of their particular tribe.

Whether Republican or Democrat, however, this makes them all creatures of the left, including Sarah Palin.

To which I say, No, thanks.

The response from the right would be that human nature is essentially evil (David Mamet), and thus requires either theocracy or monarchy, or from the center that human nature is mixed and requires a mixed polity such as the founders bequeathed to us in the form of the constitution. The latter is classical liberalism, a kind of half-way house, and true moderation! Think gray-heads marching in the streets, but without the litter.

This is the Tea Party, a form of reactionary conservatism trying to recover a classical liberalism which looks ever smaller in the rear view mirror with every passing day. The brave new world lies dead ahead if they do not succeed.

And I do mean dead.

Shiller S and P 500 Price to Earnings Ratio Stands at 20.18 as of 09.02.11

Track it here:

Buttonwood provides a defense of it here.

Obama Voted For The Bush Policies He Still Blames Today

As memorialized here in Obama's vote for Bush's TARP bailout a month before he was elected president:

Sheila Marikar of ABC News Thinks 'Bona Fide' Comes From 'Bonify'

What a scream, here:

Call it a "Marikarism".

As I clicked on it, she fixed it, too!

Evidence That Treasury Bill Financial Collateral Has Dried Up in Europe

From a recent column by Ambrose Evans-Pritchard:

Lars Tranberg from Danske Bank said European banks are reduced to borrowing dollar funds for "a week at a time" rather than the usual six to 12 months. "This closely resembles what happened in late 2008 . . .."

It's a run on the primary short-term funding money of the 21st Century, and T-bill yields have gone deeply south to prove it as demand for them increases: 14 day yields are at .005.

21st Century Bank Runs are Runs on Treasury Bills, Not Dollars

Jeffrey Snider explains their role as the new prime financial collateral, here, and why Quantitative Easing slowed the velocity of this new money by reducing their supply:

It is operationally no different than a 1930's bank experiencing a run on its stock of national currency. The lower that level of real money gets, the shakier the perception of the bank becomes, the more counterparties continue the cycle of real money removal - physical dollars in 1930, rehypothecated collateral in 2011. The perception of risk becomes reality, and this may be exactly what is playing out today as banks with questionable exposures to PIIGS have seen their abilities to operate in wholesale money markets dwindle into this current crisis.

Bret Easton Ellis Invented Obama, Too: Just as Rich, Stupid and Narcissistic as They Come

Details: Your critique of society now seems way ahead of the curve. In a way, you invented Paris Hilton and Spencer Pratt and the Kardashians.

Bret Easton Ellis: All of whom I really like a lot, except Paris. But I actually like the Kardashians. I'd like to hang out with Rob Kardashian. I think he's a nice young man. Of course, if you watch that show, you get why people want to blow us up.

Details: Who's "us"?

Bret Easton Ellis: America! But I don't care. I like the show.

Details: Years ago people could have read some of your books and said, "Oh, this is just nihilism. These people don't exist! There's nobody that rich and stupid and narcissistic!"

Bret Easton Ellis: Ha ha ha! Surprise!

(source)

Actually, Obama is Less Than Zero

"In fact, in some ways the report was less than zero in that weekly hours fell, as did hourly earnings."

-- Heidi Shierholz, quoted here

Net Zero Jobs Created in August, First Time Since World War Two

As reported here:

It was the first time since World War II that the economy had precisely net zero jobs created for a month. ...

[J]ob creation in July, which originally came in better than expected, actually wasn't as good as thought. The 117,000 jobs originally announced was cut to 85,000, while June's number fell from 46,000 to a mere 20,000. That makes four consecutive months of sub-100,000 job growth when most economists believe that 150,000 is the minimum number needed to reduce the unemployment rate meaningfully.

"Though much attention is being paid to ‘zero job growth’ in August, the real news in today’s numbers is that job growth is worse than in recent months, and the nation continues to produce far fewer jobs than needed to meaningfully reduce the unemployment rate," Heidi Shierholz, economist at the Economic Policy Institute in Washington, D.C., said in a statement. "In fact, in some ways the report was less than zero in that weekly hours fell, as did hourly earnings."

Average hourly earnings slid 3 cents to $23.09 while average weekly hours edged lower to 34.2.

Headline unemployment remains at 9.1 percent. The broader measure is at 16.2 percent, while the number of unemployed persons not counted in the numbers actually grew significantly.

Follow the link for all the details.

The UK Depression is Huge, But the Response is a Shrug of the Shoulders

So says Martin Wolf for The Financial Times, quoted here:

For the present depression to be shorter than its longest predecessor, it must end not later than April 2012. But output is close to 4 percent below its starting point, with eight months to go. ...

The cumulative loss of GDP is likely to be worse this time even than in the 1930s. It was 17.7 percent of GDP back then, against 14.5 percent, this time, so far. But this depression is not over. If growth were to be 2 percent a year, the cumulative loss would be over 18 percent of GDP.

This then is a huge depression, by UK standards. Yet the response is a shrug of the shoulders.

In America we can't bring ourselves even to speak of 'economic depression,' so deep is our collective delusion caused by the widespread gnosticism of political correctness.

The United States has had back to back years of declining GDP in 2008 and 2009, followed by a mere balance sheet recovery in 2010 defined entirely by massive government spending. With the latter now nearly at an end, GDP is in the toilet.

The answer of the Democrats is to propose more fake GDP. And unfortunately for the Republicans, they're stuck with their free-trade religion which has misallocated hundreds of billions of dollars abroad, especially to China, and with it all our jobs.

Where are the Patriots?

Black Indiana Democrat Calls The Kettle Pot

Rep. Andre Carson (D, IN-7), quoted here:

"We have seen change in Congress. … The Tea Party is stopping that change."

"This is the beyond symbolic change. This is the effort that we are seeing of Jim Crow. Some of these folks in Congress would love to see us as second class citizens. Some of them in Congress of this Tea Party movement would love to see you and me … hanging on a tree."

You mean like this, Andre?

The Rep. from Indiana just won't let go of his animus, made famous by his baseless charges about racial epithets hurled at him in the wake of the passing of ObamaCare.

He was the very guy who was strutting in defiance with Speaker Pelosi through the crowd of protestors after passage of the legislation in March 2010. It got hot, but no one ever proved such epithets were directed at him or any other black member of Congress that day.

Even Adjusted For Inflation, Social Security Taxes Have Gone Up 800 Percent Since Inception

So figures Michael Tanner, here:

In fact, Social Security taxes have been raised some 40 times since the program began. The initial Social Security tax was 2 percent (split between the employer and employee), capped at $3,000 of earnings. That made for a maximum tax of $60. Today, the tax is 12.4 percent, capped at $106,800, for a maximum tax of $13,234. Even adjusting for inflation, that represents more than an 800 percent increase.

Unintended Consequences: Economic and Monetary Union 'is Turning Europe's Nations Against Each Other'

So Ambrose Evans-Pritchard here, writing about Hans-Olaf Henkel's remarks in the Financial Times:

Hans-Olaf Henkel, former head of Germany's industry federation (BDI), wrote in the Financial Times that his support for the euro had been "the biggest professional mistake I have ever made". He described EMU as an unworkable experiment that is turning Europe's nations against each other.

American Money Market Funds Pull Back Amid Growing Distrust of Europe

Jon Markman reports on one of the negative feedback loops threatening another credit crash as observed by Satyajit Das, here:

American money market funds, which manage around $1.6 trillion, historically invested around 40 percent, or $600 billion to $700 billion, with European financial institutions. Over the last few months, the money market funds have reduced their exposure to European entities. The funds have also decreased the term of their loans to the European entities that they are willing deal with to as little as seven days at a time, in an effort to limit risk, Das said.

What if This Time is Different, But Not in the Good Way?

Jeff Nielson argues here that the desperate efforts of governments everywhere, but especially in the US, to disallow a deflationary collapse are motivated by fear of actual insolvency, not mere deflation:

A solvency crisis is an economic nightmare several orders of magnitude worse than a mere deflation. In a solvency crisis, "deflation" implies nothing less than bankruptcy. This is why our intellectually bankrupt central bankers have refused to allow deflation to take hold in our economies. Our economies are saturated with bad debt, and when this bad debt is eventually purged from our economies, our economies will default on their debts. Period. ...

In an ordinary deflation, "cash is king" (even arguably worthless paper currencies). However, in a solvency crisis "cash is trash" unless that cash is directly backed with precious metals.

Why is Michael Lewis a Kraut-hating Bigot?

Scott Locklin wants to know, here:

Michael Lewis attempts to get to the bottom of the German side of the financial crisis. This is an interesting and tremendously important subject. Why? Because Germans didn’t have a financial crisis. This, despite the fact that the German Landesbanks were the counterparties in a good fraction of the printing of shitty bonds (aka, Germans own a lot of the worthless bonds printed up by American banks). This despite the fact that the Germans own a bunch of shitty Greek government paper. This despite the fact that Germany was incinerated and invaded in WW-2, and half her territory and a third of her population incarcerated under communism until 1989. Yet, Germany is a prosperous and pleasant nation to live in; one of the best in the world. Germany manages to have lower unemployment than the US, despite all their unions and socialistic regulations for hiring and firing: laws which Harvard economist ding a lings will insist would be the ruination of the American economy. How did the Germans manage this?

Michael Lewis doesn’t know; he’s too busy making turd jokes. 

On the Myth of the Peaceful, Unsuspecting and Unprepared Great Britain in 1911

"To say that Sir E. Grey, and à fortiori Mr. Asquith, the Prime Minister; Lord Haldane, the Minister for War, whose own book has been a most tremendous let-down to the fictions of the propagandists; Mr. Winston Churchill, head of the Admiralty, who at Dundee, 5 June, 1915, declared that he had been sent to the Admiralty in 1911 with the express duty laid upon him by the Prime Minister to put the fleet in a state of instant and constant readiness for war; to say that these men were taken by surprise and un-prepared, is mere levity."

Albert Jay Nock, The Myth of a Guilty Nation, 1922, here

All Housing Price Appreciation in the Last Decade is Now Gone

So says Calculated Risk Blog here:

In real terms, the National index is back to Q3 1999 levels, the Composite 20 index is back to September 2000, and the CoreLogic index back to May 2000. 

In real terms, all appreciation in the last decade is gone.

But there is still considerable room to drop before all excesses of the bubble, which began its inexorable rise in 1997 coincident with the provisions of the Tax Payer Relief Act of 1997, are expunged. The only question is, How much will prices overshoot to the downside of those 1997 levels?

"The act exempted from taxation the profits on the sale of a personal residence of up to $500,000 for married couples filing jointly and $250,000 for singles. This is for residences that were lived in for at least 2 years over the last 5." (source)

I am not convinced that the bottom is in.

Barackukakis

(source)

The Gutsy One (in the background)