Category: Politics

Democracy and Marriage, Pt 1

Nick Griffin’s Appearance on BBC’s “Question Time”

Recently, an event of surpassing lunacy took place on British television. The weekly popular current affairs programme, “Question Time”, invited Nick Griffin to appear as one of the five politicians who respond to questions from a studio audience. There are some clips from the programme on the BBC website.

Now Nick Griffin is not just any old boring political hack; he is the Leader of the BNP, the British National Party.

For our American friends who may not be up to speed on the minutiae of British politics, this is a minority party which is strongly anti-immigrant. Moreover, Nick Griffin himself is homophobic, has flirted with leaders of the KKK and is said to be sympathetic to Nazi ideas, though this he denies, alleging that the British Nazis hate him.

The latter, by the way, are a group of microscopic importance on the British political scene; extremism having never taken root in British politics.

U.S. Cash for Clunkers Program a Failure?

Is there evidence that this US programme has been a failure?

I was asked by a reader recently about my claim that the Cash for Clunkers program was a failure. He said, and I quote, “And your proof is…?” Here is my response:

My conclusion that the Cash for Clunkers program was a failure is based on three factors.

One, it did not have the intended consequences on the environment; for those folks who purchased a marginally more fuel efficient car now, rather than later, the added fuel efficiency was likely more than offset by the pollution generated by destroying the old car, and by the loss in additional fuel efficiency they would have enjoyed had they waited a year or two to replace their current vehicle with an even later, even more fuel efficient model year.

Two, the costs of the program, which are much greater than the $4,500 rebate, far exceed any benefits generated. Abrams and Parsons in the Economists’ Voice estimate that the costs of the program exceeded the benefits by about $2000 per car. A recent study by Edmunds.com put the cost of the program at $24,000 per car once the cars purchases that would have occurred during that period anyway are deducted (http://content.usatoday.com/communities/driveon/post/2009/10/620000657/1). I think the real cost is somewhere in-between, but closer to $24,000 than $2,000.

The true costs of the program include but are not limited to the additional paperwork and private and public workers needed to administer the program, the interest costs to dealerships of financing the rebate program while awaiting the government checks (some less capitalized dealerships actually went out of business because of the program), the costs of destroying the old vehicles, and the cost of lives lost and injuries sustained in accidents in smaller, less safe but more fuel efficient cars, just to mention a few.

Last, this “injection” into the economy — which, in reality, is the blatant substitution of private consumption choices with public policy, and an affront to our economic freedom — costs the economy untold sums by putting off the inevitable failure of automotive companies that fail to produce cars the population values sufficiently to keep the auto companies in business without being propped up by the government.

Case in point: GM’s plunge of 45% and Chrysler’s fall of 43% in the months following the rebate program; Honda and Toyota also reported double-digit slides, while Kia and Hyundai had double-digit increases.

New car sales fell in September as the predicted post-“cash for clunkers” slump dragged the U.S. market down to its lowest levels in seven months.

I wish it weren’t so, but I’m afraid that good business is not the strong suit of our policymakers.

By Sherry Jarrell

Zombie Stocks: Not for the faint of heart

Prof. Sherry Jarrell in the news

A news release by Wake Forest University has been picked up by at least one publication. It reads as follows:
Two weeks before Halloween, the Securities and Exchange Commission again warned investors against buying shares of bankrupt companies, but like those creatures in horror films that rise from the dead, so-called “zombie” stocks–shares of companies that failed during the financial crisis–are still on the march. zombies

Take, for example, Washington Mutual and Lehman Brothers. At the end of last year, their stocks traded at 2 cents and 3 cents per share, respectively. With no future earnings in sight, shares of Washington Mutual recently traded around 20 cents, and Lehman Brothers shares have hovered around 15 cents–spectacular gains fueled by what many consider nothing more than gambling.

Critics have called on the SEC to halt the trading of such stocks to protect unsophisticated investors who might be lured into unwise trades. But Professor Sherry Jarrell, who teaches a graduate-level class on investments and portfolio management in the Wake Forest University Schools of Business, disagrees.

While Jarrell doesn’t think investing in zombie stocks is a sure-fire profitable strategy, she doesn’t consider it gambling either, because there is an expectation of gain. Jarrell also doesn’t believe those who are trading zombie stocks are ignorant or unsophisticated. Jarrell says:

To outlaw these stocks means that you’ve truncated an avenue for people to express their different risk preferences. If someone wants to go on that haunted trail, let them. It’s not like they’re taking advantage of people on the other side of the trade.

Washington Mutual and Lehman Brothers lost their standing to be listed on stock exchanges, so traders have to keep up with prices through a quotation service known as the Over the Counter Bulletin Board, which unsophisticated investors are unlikely to access. Other troubled companies, such as Fannie Mae, Freddie Mac and AIG, whose shares are widely considered to be zombie stocks, are still listed on major exchanges. The federal government’s own backing of those companies weakens any argument against allowing individuals to invest in them, if they dare.

One project Jarrell assigns her students is to identify a publicly traded stock they believe the market has significantly mispriced. By definition, she says, the exercise requires the same calculation made by traders of zombie stocks–reaching a different conclusion about a stock’s future cash flows and risks than that of the market.

Jarrell points out that all investments carry a degree of risk proportional to potential returns, and investors have varying tolerances for risk. Some hide from risk; others seek it out.

She recalls a study some years ago that found striking similarities in the blood chemistry of day traders on Wall Street and jet fighter pilots. “It turns out they need a certain amount of danger to feel normal,” Jarrell says. “They seek risk in order to feel comfortable.”

By Sherry Jarrell

Perkins and the Economy

Transcripts from our bug in the Ministry of Misinformation, Whitehall, London

Sir: Morning, Perkins. You look a bit perturbed this morning …

Perkins: Good morning, Sir …. well, it’s the economic news …

Oh come on Perkins … swings and roundabouts, economic cycles, what goes around comes around and all that.

Yes, but it seems we’re in the longest recession since records began.

Records, Perkins? Well, of course they’re there to be broken, and if anyone can do it, the Labour Government certainly can! Come on, cheer up – it’s just a spot of fiscal turbulence … in six months we’ll be wondering what all the fuss was about ….

Six months?

Well, nine months then … the PM has promised an end to the recession in 2010.

Some are saying that government promises about the economy aren’t worth the paper they’re written on …

Well, he only said it, Perkins. I don’t think he actually wrote it down as evidence, so to speak.

But he also said: “Britain is better placed than other European countries to weather the recession”, and now look at France and Germany! My old schoolmate Snuggs down in Southern Germany says there is no sign of a recession – boarded-up and charity shops are as rare as unicorns, BMWs, Mercedes and Audis whiz back and fro’ to Munich – not an old banger is to be seen, immaculate countryside …. the only black spot is farmers whingeing about the low price of milk, but then they’re always whingeing about something.

Perkins, I’ve told you before, that’s Germany … you can’t apply the same standards of comparison to Britain …. as for posh cars, well, they make them don’t they? They probably have a surplus and so are flogging them off cheap.

But what about the sinking pound, Sir? It’s now just hovering around parity with the euro – a year ago it was well above it. It’s very worrying …

Perkins …. I believe you’ve never studied economics, have you? that’s just the way it is. The German currency always goes up relative to the pound. I remember when I was at school it was 11DM to the pound.

But it’s not the German currency, Sir, it’s the euro.

Don’t be silly, Perkins. The euro is 90% the Deutschmark in reality. But I wouldn’t worry about the falling pound: it’s great for our exports. Besides, it hasn’t fallen relative to people in Britain. The pound in your pocket has maintained its value. Old Harold Wilson had a good understanding of relativity …. our whole approach is based on the principles of Einstein himself.

But won’t commodities rise, Sir? After all, we depend on imports for practically everything.

Aha! But that’s good for restraining consumption … we must consume less, Perkins, if we are to save the planet.

But the PM is banking on increased growth to save the economy, so how can we have increased growth and lower consumption, Sir? I don’t understand!

As I said before, Perkins, you’re not an economist – or a politician, come to that …..

But they’re saying that we are borrowing billions just to cover current expenditure rather than spending it on long-term infrastructure projects.

Ah … now you’re getting a bit technical, Perkins … you really must avoid jargon … after all, this is the Ministry of Misinformation ….

Jargon? What about “quantitative easing”? Isn’t that just jargon for “borrowing even more humungous amounts of money we haven’t got?”

Perkins – you’re getting confused; obviously we haven’t got it if we have to borrow it …. besides, “quantitative easing” is nothing like borrowing as you describe it.

Why not, Sir? I don’t understand.

It’s completely and utterly different, Perkins. It has a different name for a start.

Well, I can’t help being worried, Sir.

Enough of this nonsense, Perkins. The economy is booming … have you been to Harrods lately? Absolutely packed ….

Yes Sir, with Arabs and Russian oligarchs ….

Well, look on the bright side, Perkins, at least they’re spending their money over here rather than in their own countries ….. besides, where would the Premiership be without their money? …. come on, Perkins – let’s have a cup of tea and forget about all this economic nonsense … we have some misinformation to sort out …

Introduction to Perkins

A tongue-in-cheek reflection on the absurdities of British Goverment.

In 1980 the BBC first broadcast a satirical situation comedy called Yes Minister. It was hugely popular. It attempted to illustrate through (slight!) exaggeration the arcane world of ministerial life and how the British Civil Service Mandarins, in the end, were the ones truly in charge of Her Majesty’s Government. Here’s a taste of the programme:

Almost difficult to believe that that was broadcast nearly 30 years ago – could have been yesterday! Here’s another clip:

Nothing much has changed since then … indeed, real as opposed to illusory change is something that the Civil Service strives constantly to avoid. For the information and instruction of a new generation of voters, our devious and doughty correspondent has managed to engage the services of a modern “Deep Throat” who has furnished us with transcripts of current conversations from one of the Ministries. To protect the identity of the individuals involved, we have renamed the former the Ministry of Misinformation, since – obviously – this could be any one of the multiple current ministries.

We intend to reveal further on-going communications in the fullness of time, hoping as always that the identity of “Deep Throat II” will not be revealed though the launch of a leak enquiry. We are fairly optimistic about this since leak enquiries have never provided any results in the past.

The first ‘communication’ is tomorrow at 16:00 GMT.

By Chris Snuggs

A Better Idea: let’s limit TARP legislator pay!

Saving taxpayers some money?

Seems that Congress is hell bent on replacing the best-functioning labor market in the world with their own unique brand of wisdom. Well, I have a better idea. Why don’t we slash in half the pay of all those Congressional leaders who came up with the TARP idea in the first place, since they are spending our money, and I think it is clear that they are spending our money unwisely, which is precisely the logic they use to confiscate the salaries and bonuses of the bail-out executives.

Moral of the story? Government should not be in the business of trying to run a business. The TARP bailout should have never seen the light of day. With no TARP bailout, Congress would not have had it’s latest excuse for grabbing up yet more of the private economy’s resources for trying to put this country back on track toward improved productivity, output, jobs, income, and security.

By Sherry Jarrell

More truth about this crisis

“Never in the field of financial endeavour has so much money been owed by so few to so many. And, one might add, so far with little real reform.”

Thus spoke Mervyn King, governor of the Bank of England, on Tuesday night, 20th October, to a group of Scottish

business people. Echoing one of Churchill’s many famous sayings, Governor King is probably one of the highest ranking people around to state, at last, what everyone on the Clapham Omnibus (a London bus route) knows to be obvious. Whether the forces can build to a point where common sense is applied by Governments before we enter another Great Depression is another matter.

Mention of the Great Depression (the last one) triggers a step back in time.

On June 16th 1933 Franklin Roosevelt signed into law the Glass-Steagall Act. In fact that was the second Act signed

into law, the first Act was passed by Congress in February 1932 and was largely designed to stop deflation. The second Act was, in a sense, much more important because it set out to prevent bank holding companies from owning other financial institutions. It was repealed on November 12th, 1999 by the Gramm-Leach-Bliley Act. Just a little under 10 years ago. 10 years which have seen the biggest boom-bust probably ever in modern history. And has much of the Western world slipping into another great depression.

US Senator Carter Glass and US Congressman Henry B. Steagall must be turning in their graves

But thank goodness for investigative journalism and the role of the Internet in creating a truly open ‘meeting place’.

Janet Tavakoli on Warren Buffet

The following is reproduced in full from the TSF website and is reprinted with the permission of Tavakoli Structured Finance, Inc.

It’s a fascinating tale about Warren Buffet in the midst of all the financial turmoil. And in case you think that Tavakoli Finance is run by the grey suit brigade …

Read Tavakoli’s article about Buffet

Climate warming: the debate continues

Alan Carlin believes that rising greenhouse gases are not the cause of warming, on scientific grounds.

Yesterday we published a long guest Post from Patrice Ayme who argued that climate warming is a very serious risk to this planet, as we know it.

Alan Carlin has gracefully given Learning from Dogs permission to reproduce his article that argues, on a scientific basis, that man-made greenhouse gases are not the cause of warming.

Again, this is an article that needs to be read. Alan’s Blog is here.

Read Alan Carlin’s article

Climate warming: the debate

Patrice Ayme believes it is real, on a scientific basis.

On the 16th October, we published a Post called Climate warming?. The sub-heading gave a clue to the content of the Post: What’s the truth about climate warming, e’rr change?

My stance was to express doubt about man causing climate warming. But then, a good friend of this Blog, Patrice Ayme, added this comment:

Lowest ice on record in the Arctic was 2007, then 2008, and now 2009. [More exactly the sea with more than 15% ice reflecting.]
As I pointed out on http://patriceayme.wordpress.com/2009/05/ (May 31, 2009).
The sun has been going down in the last 30 years or so… Watch the nice graph there, extracted from Science Mag…
We are just coming out of a solar minimum so pronounced that cosmic rays, less deflected by the sun’s magnetic field, have become a problem… This explains why greenhouse heating has been less pronounced than some expected in the last few years. Things should pick up in the next 7 years, as the sun heats up. The multiplying factor is 3 or 4…

It seemed appropriate to ask Messrs Ayme and Carlin for permission to reproduce both their Blog articles. Both very kindly agreed – thanks Gents.

These are long articles – but will inform you in a way that the mass media never do.

Here’s Patrice (Alan Carlin’s article tomorrow):
Read more about this important subject

Share this:

Share this:

Share this:

Share this:

Share this:

Share this:

Share this:

Share this:

Share this:

Share this: