Letter to my Senators...

Since the Senate is voting on Bailout Legislation tomorrow....

Dear Senator:

I beg that you reject the current legislation being proposed to bailout the financial system with any taxpayer money. This government action will do nothing but prolong the current problems.

Please consider a couple of things. This month, there were over $7 Trillion in loans and leases in the US according the Federal Reserve Bank in St. Louis, a new record. Given this fact alone, there is no shortage of credit. In addition, why would banks loan money between themselves when the Fed has made it so easy to borrow from the bank of last resort?

Consumer loans also reached an all-time high of $845 Billion according to the St. Louis Fed. Just yesterday, Lowes gave my wife a no-questions asked $2000 credit line. After filling out the application, it was $13,500. She does not even have a job. Again, more evidence there is no credit crunch.

A government bailout does nothing to alleviate the real problem, housing prices that are over inflated. It is five states causing the problem as houses were not priced at market prices because money was too easy. More money just prolongs the current problem as housing prices have to reflect a market reality and they simply do not today. I know this means a lot of pain for a lot of people, but these same people should never have been homeowners at these price levels in the first place.

Assume we have 3 million homes in foreclosure and they carry a $250,000 mortgage. This is close to the $700B congress is asking for. You would be better off buying the homes and selling them back to residents at half price only costing tax payers half the money. This would re-price homes and accelerate the needed price declines. Of course this in an over simplification, but buying derivatives does nothing but get bad assets of bank balance sheets. These banks should be allowed to go bankrupt and the valuable parts of the business sold off to better institutions.

Do not punish the taxpayers that were prudent and made good financial decisions. We all saw the new houses, cars, and consumer goods that people could not afford but some how bought. These are the people that need to bear the burden.

Respectfully yours,

Wichita, KS

The Wisdom of Ron Paul

Rep. Paul makes a lot of good points about the pending bailout. This column in townhall.com is great.

Q: You pin most of the blame for this crisis on government.

A: Oh yeah. More specifically, the Federal Reserve. (It's) responsible for the booms and the busts. You can't have this type of a boom cycle without a Federal Reserve and a central bank and it can be bounded with other parts of the government. Legislation might push an excessive amount of money into certain areas in addition to the easy-money system, and that's what I think happened. There were these affirmative action programs where banks were literally encouraged or told they had to make bad loans. The Community Reinvestment Act tells them they can be fined a lot of money for denying loans that are risky. It's sort of ironic.

And if one looks at the total problem of inflation, in which prices go up because of the increases in the money supply, certain areas go up much faster than others. So medical care and education and houses went up much faster but then there has to be corrections. They get out of whack and these prices have to come down. So we see the correction and the sooner you get the prices down, the better it is for everybody.

Q: The $700 billion figure. If you multiply roughly 3 million homes in foreclosure by $100,000 -- assuming they are underwater on their mortgages by an average of $100,000 -- that's "only" $300 billion.

A: So where's all this money going, huh?

Q: Yes.

A: Propping up derivatives; that's the scam. It's the so-called "illiquid assets." I think that's a misnomer. I think it's "worthless assets" that are being bought up so some of these big guys don't get wiped out.

Q: You say a $700 billion bailout is only a temporary fix.

A: Yeah, it is. If you come to the conclusion that you have to liquidate debt, the faster you get it over with the sooner the economy goes back to work. So they're propping up the prices artificially on houses and at the same time they are saying, "How can we stimulate housing growth?" Well, there are too many houses. You want the supply and demand of houses to adjust, so you let the prices of houses come down and let the houses get in the hands of people who really want them and can afford them and you quit building houses for a while.

So, yeah, you have a booming economy when you deceive the people and you stimulate the economy with easy credit. But you've got to make up for it eventually, and that's the part that nobody likes. We have prevented any attempt at correction essentially over the past 20 years. So we have a bigger bubble than ever before, which means we'll have a bigger correction than ever before. So the only question is, should it be a short, tough correction or a very long, tough correction?

Top Ten Reasons To Oppose The Bail Out

From freedomworks.org (Dick Armey's Movement):

1. NO REFORM: The plan attempts to mask, rather than reform, imbalances in credit markets and in U.S. economic public policy. The plan props up reckless and failed banks by buying "troubled assets" instead of focusing on real reforms that go after government sponsored culprits Fannie Mae and Freddie Mac, and sustainable policies that will increase the availability of private capital and expanded economic growth.

2. TREASURY POWER GRAB: The plan raises Constitutional concerns by dramatically expanding the power of the current and future Treasury Secretaries, giving the government agency power to directly purchase assets from for-profit financial and non-financial firms.

3. STUNNING PRICE TAG: The $700 billion bailout figure is as much money as the combined annual budgets of the Departments of Defense, Education and Health and Human Services. It amounts to $2,300 for every man, woman, and child in America.

4. INCREASES NATIONAL DEBT: Instead of cutting spending elsewhere, Congress will borrow all $700 billion on global capital markets, and the bill raises the national debt ceiling to a staggering $11.3 trillion.

5. GLOBAL BAILOUT: The plan includes taxpayer purchases of distressed assets from foreign banks.

6. HURTS RESPONSIBLE AMERICAN BANKS: The plan punishes responsible U.S. banks by keeping reckless, insolvent investment banks in business. As BB&T CEO John Allison wrote in a letter to Congress on Sept. 23rd, "....this is primarily a bailout of poorly run financial institutions.... Corrections are not all bad. The market correction process eliminates irrational competitors."

7. FLAWED PROCESS: Members of Congress and the public will have less than 24 hours and no hearings to discuss and understand the impact of this sweeping plan. This rush to pass a wildly unpopular plan without benefit of significant public debate and input will also undermine its legitimacy and effectiveness.

8. BY WALL STREET, FOR WALL STREET: Treasury Secretary Paulson, the architect of the plan, was formerly the head of Goldman Sachs, one of the firms responsible for the mess and a direct beneficiary of the bailout. Further, the advisers managing the bailout auctions and assets will be Wall Street firms and will likely receive billions of tax dollars in fees.

9. OTHER OPTIONS NOT EXHAUSTED: The idea that taxpayers will make money on the bailout is not credible. There are ready buyers for these "troubled assets" -- Merrill Lynch sold its entire portfolio of mortgage backed securities in July-- provided the price is low enough. If a profit was possible, private speculators would readily buy these troubled assets.

10. MORALLY OFFENSIVE: The plan violates basic principles of American capitalism and honest governance by creating a system of "private profits, socialized losses" that transfers money from taxpayers directly to Wall Street investment banks. Free market capitalism only functions if individuals and firms are held accountable and are allowed to both succeed and profit, and also to sustain losses and even fail.

I tend to agree with all but #8. Goldman saw the problem and got out. This problem goes all the way to the crooked mortgage broker in every town, city, and burg in America and works its way up to Wall Street.

The Best Explaination of the Problem Today

I really like, and believe, this explaination of the problem.

Trust Capitalism

Further examples of how government involvement makes problems worse, not better. The very reason Paulson and Crew need to leave this one alone.

The Mortgage Blow Up BS

This NPR program goes into great detail and clearly explains the problem we are all in today. After listening, I am even more opposed to the bail out. It is worth the time to listen.

NPR

The entire process is disgusting. It is really disturbing how much fraud was part of this blow up. Now they want tax payer money? I am also convinced the government will not make money on this deal. Taxpayers will be stuck with the worst of the worst investments resulting in huge losses.

The irresponsibility that permeated this mess will cost us all dearly. My guess is it will occur again within 10 years. Privatizing profits and socializing losses makes everyone forget the nasty side effects of risk.

Bailouts and Blame

Great piece in IBD today.

We recognize that in times of financial exigency, as this clearly is, government often steps in to do what it can to stop the hemorrhaging. Politically, it may not have a choice. But we can't forget that many, if not most, of the problems in the financial sector today are a result of government over-regulation, or misregulation, and political cronyism.

We've already documented how Fannie Mae and Freddie Mac were used as a jobs program for out-of-work Clinton administration officials and other Democrats, ranging from Franklin Raines to Jamie Gorelick to Jim Johnson.

And how tens of millions of dollars in political donations from those two government-sponsored enterprises distorted decision-making in Congress. This has been the problem all along.

The U.S. government regulates the private sector on behalf of taxpayers who expect competency, fairness and transparency.

But when the federal government messes up, those principles go out the window. And the lender of last resort isn't the Fed or Treasury, as some would have it. It's always the taxpayer.

Remember this when a Democrat-led Congress holds hearings — as House Speaker Nancy Pelosi now promises — and lambastes "the private sector" and "Bush economic policies" for these market meltdowns. Neither deserves the blame.

Letter to Congressmen

Dear Senator:

I am very troubled by the prospects of the US Government providing $50 Billion in funding to the domestic auto industry. This industry has time and again failed to operate by basic business principles. Executives have failed to deliver what customers want and negotiated labor deals that were sure to send the companies into bankruptcy.

The US Government needs to stay out of the auto industry malaise. If these companies go bankrupt, so be it. Company assets will be bought by other investors at pennies on the dollar and labor agreements will be renegotiated. This will result in stronger companies and better long-term industry prospects.

Another item that needs to be reconsidered are the CAFÉ standards. If Congress wants people to use less gasoline, tax it. Forcing the auto makers to design cars to use less gas makes them design products consumers do not want. If the price of gasoline stays around $4/gallon, people will start buying those fuel efficient vehicles that GM, Ford and others are selling around the globe. We can solve the energy conservation problem without legislation by a Congress that knows little about automotive design. What we need is a market-based solution, not a bureaucratic one.

Sincerely,

Wichita, KS

Campaign for Character

Prof. Boudreaux writes a great letter to the editor today.

Here's a letter sent yesterday to the New York Times:

Paul Krugman is correct: the McCain campaign's fabrications and half-truths say much about what a McCain administration would do ("Blizzard of Lies," Sept. 12). But an Obama administration is unlikely to be any better. Sen. Obama eloquently proclaims platitudes. He gallivants around the country to perform for adoring crowds - masses of people stirred by his mere presence and cheering his empty bromides. Because it's true, as Mr. Krugman notes, that "how a politician campaigns tells you a lot about how he or she would govern," a President Obama would be chiefly a messianic cult leader, promising miracle cures and salvation-by-the-speech - and daily coming more and more to mistake his own charisma for character, and his own rhetoric for reality.

Sincerely,
Donald J. Boudreaux

A Public Service Announcement

At times like this when the government is going wild with spending, it is good to have a reminder about its impact.

From Russ Roberts.

Economic Tradgedy in MI and OH

Phil Gramm has a good editorial today in the WSJ. Short version is that B Hussein's policies have already been tried in Ohio, Illinois, and Michigan with disasterous results. These three states have expereice economic stagnation while state like Texas, Arizona and Florida have expereiced solid growth with McCain-like economic policy.

Wall Street Journal

Lieberman Was The Right Choice

Sen. Lieberman was the right choice for McCain's VP because he is a good leader. His leadership is visible in his policy of free trade. He could not be more correct in saying that free trade helps the lowest income people in our country. It is cheap goods from all over the world that has raised the standard of living of the lowest rungs of the US economic ladder.

Here is Lieberman's editorial in IBD:

To begin with, trade supports millions of jobs in America. All told, 25% of jobs in the U.S. today are linked to world trade. And in the current economic downturn, exports are one of our few growth sectors. Demand for American exports is at the highest level ever, total exports are up 7% in the first six months of the year, and our exports to China are up 20% from a year ago.

Free trade also means that ordinary Americans pay lower prices for consumer goods. Anti-trade policies, by contrast, translate to higher prices from the grocery store to the shopping mall — an indirect tax increase that inflicts the greatest harm on those who have the least money to spend.

Forty years ago, countries in Asia like South Korea and Singapore were as impoverished as their counterparts in sub-Saharan Africa. Today, hundreds of millions of people in Asia enjoy middle class prosperity, with hundreds of millions more soon following in their path. This is one of the great success stories of human history — and it was made possible by trade.

Sadly, today's Democratic Party, including Sen. Obama, has largely turned its back on this proud legacy. Sen. Obama, for instance, voted against the Central America Free Trade Agreement, has threatened to renegotiate NAFTA — calling it a "bad deal" — and opposes pending free-trade agreements with South Korea and Colombia.

This anti-trade posture is ironic, given Sen. Obama's pledge to restore America's reputation around the world. In fact, free trade is the embodiment of international cooperation. By pledging to backtrack on longstanding agreements, throw up protectionist barriers, and abandon our closest allies, Sen. Obama has charted a course that will undermine our global leadership and risk putting our country into a deep recession.

Palin Politics...

As it turns out, New York politicians have nothing on Sarah Palin. The NYT has some interesting insight into Palin Politics. Many of her tactics are right out of the Clinton and Bush playbook. Things like cronyism, secrecy, and shady dealings are all part of Palin Politics.

The most disturbing thing for me is her secrecy and deliberately trying to get around public transparency. When government is no longer transparent to the public we should all be very concerned.

Interviews show that Ms. Palin runs an administration that puts a premium on loyalty and secrecy. The governor and her top officials sometimes use personal e-mail accounts for state business; dozens of e-mail messages obtained by The New York Times show that her staff members studied whether that could allow them to circumvent subpoenas seeking public records.

This should be a weakness easily exploited by the B Hussein camp. Now the hypocritical piece of the puzzle:

Ms. Palin discovered that the state Republican leader, Randy Ruedrich, a commission member, was conducting party business on state time and favoring regulated companies. When Mr. Murkowski failed to act on her complaints, she quit and went public.

In the middle of the primary, a conservative columnist in the state, Paul Jenkins, unearthed e-mail messages showing that Ms. Palin had conducted campaign business from the mayor’s office. Ms. Palin handled the crisis with a street fighter’s guile.

“I told her it looks like she did the same thing that Randy Ruedrich did,” Mr. Jenkins recalled. “And she said, ‘Yeah, what I did was wrong.’ ”

Mr. Jenkins hung up and decided to forgo writing about it. His phone rang soon after.

Mr. Jenkins said a reporter from Fairbanks, reading from a Palin news release, demanded to know why he was “smearing” her. “Now I look at her and think: ‘Man, you’re slick,’ ” he said.

She certainly has a tendency to get rid of the old school politicians, but she replaces those people with friends. While loyalty is important, so is effectiveness.

Ms. Palin chose Talis Colberg, a borough assemblyman from the Matanuska valley, as her attorney general, provoking a bewildered question from the legal community: “Who?” Mr. Colberg, who did not return calls, moved from a one-room building in the valley to one of the most powerful offices in the state, supervising some 500 people.

“I called him and asked, ‘Do you know how to supervise people?’ ” said a family friend, Kathy Wells. “He said, ‘No, but I think I’ll get some help.’ ”

The Wasilla High School yearbook archive now doubles as a veritable directory of state government. Ms. Palin appointed Mr. Bitney, her former junior high school band-mate, as her legislative director and chose another classmate, Joe Austerman, to manage the economic development office for $82,908 a year. Mr. Austerman had established an Alaska franchise for Mailboxes Etc.

While the New York Times is normally bent to favor the left, these are the types of behaviors that are very alarming regardless of political point-of-view. Palin is not for smaller, reformed government. She has been for cronyism, secrecy, and the same politics that is taking this country down the wrong path. It will come back to hurt McCain.

One Trillion Dollar Transfer

From the Independent Institute:

How Goes the War on Poverty?

Americans transfer about one trillion dollars a year to low-income families at the bottom fifth of the U.S. income distribution. Putting that into perspective, one trillion dollars is more than twice the total spent annually on national defense, ten times as much as was spent on redistributive policies in the 1950s (adjusting for inflation), and about equal to the total before-tax cash income of middle-income households, according to Independent Institute Research Fellow Edgar K. Browning, author of Stealing from Each Other: How the Welfare State Robs Americans of Money and Spirit.

Had that money gone directly to those poor families--with no "leakage" by the federal bureaucracy middleman--that trillion would break down to about $81,000 for a family of three--higher than the median income of all American families and far greater than the poverty threshold of $15,577, according to Browning.

Those sizable sums should prompt Americans to ask rather obvious questions: Are poor Americans more independent and self-supporting than before the War on Poverty? Are children born into poor households better off than they were before the War on Poverty? Has the trillion-dollar expenditure reduced inequality? Are egalitarians grateful to Americans' sacrifices in the name of redistribution, or do they continually complain about rising inequality?

"The answers to these questions, I submit, paint a bleak picture of the accomplishments of the American welfare state," writes Browning in a new op-ed. "While a nuanced interpretation of the evidence may identify a few positive returns on our 'investment,' we have a right to expect a lot more for a trillion dollars a year."

Just more proof that government is not free of charge. The machine of big government manages to consume huge sums of money that orginally had good intentions. Just wait until that machine gets its hands on health care.

Wind Energy

My letter to the Wichita Eagle today:

Wind Energy and the Consumer

Recently I received a notice in the mail that Westar Energy was holding hearings about a potential 15% rate increase. I understand that costs in the industry are on the rise. Raw materials for infrastructure improvements, expensive government mandates, and rising fuel costs are certainly taking a toll on the bottom line for Westar Energy. However, one thing in the Westar notice regarding the reason for rate increases bothered me: Improving technology for renewable energy resources, particularly wind.

I am among a growing number of Americans that are skeptical about the man-made impact on climate change. I do not believe there is sufficient evidence to point out that our behavior is causing the changes many environmentalists tend to blame on man. So forcing me to pay higher electric rates due to unproven theories about our impact on the environment seems wrong.

I do support others in their wish to support such theories. Therefore, I think it should be those people that pay higher rates for electricity since it is their beliefs that are driving costs higher. So instead of charging all customers higher rates, only charge those customers more that want to use alternative energy sources. This policy could easily be implemented by sending all ratepayers a ballot so they can decide what energy source they prefer to use. If a ratepayer does not send in the ballot, Westar should assume they want to pay the higher, alternative energy rate.

This mechanism would fully fund alternative energy if customers truly want it. If Westar finds ratepayers are not selecting alternative sources for their energy needs, then they should stop making investments in those sources. If customers want more alternative energy, they will be collecting more revenues to invest in those sources.

A market-based solution to part of this rate increase makes perfect sense. People that believe man is responsible for climate change can pay for it and the rest of us that are skeptical can continue to enjoy lower energy bills.

Green Jobs, The Policy Utopia

The fact that B Hussein keeps talking about a $150B strategic investment in green energy that will create 5 million new jobs is ridiculous. First off all, that represents over $30,000 for each "created" job. That is money taken from taxpayers that is no longer available for private sector investment. If B Hussein is going to "give" $150B out in the form of grants, that means the government will have to confiscate even more money since the cost of government is not free. So is this new Green Bureaucracy going to cost another couple billion to operate? After all, it is strategic investment meaning that is will require some thought.

So the next question is who will decide who gets these grants? Al Gore perhaps? There will be a gold rush reaction to this hand out with everyone with a inkling of a green idea seeking the "free" money. We tried this before with Carter's synthetic fuel initiative. What did we get, nothing. What did it cost, billions.

Let's assume some of these projects do not pan out or work. I doubt these projects will be 100% successful. So who is going to decide to cut-off these dysfunctional projects? Will it be the same bureaucrats that decided to fund them in the first place? Or will the Green Initiative just keep throwing more money at these worthless projects?

B Hussein's initiative is utterly preposterous. Only the market can effectively allocate funds. Venture capitalists and investors take risk based on the potential pay off in future profits. When those profits prove illusive, they stop funding these investments. They also more carefully scrutinize these investments before investing a dime. Therefore, only the best projects get funding.

Government cannot replicated the venture capitalist. There is no profit incentive or loss penalty for poor decisions in government. You can bet this will be a hugely unsuccessful program.

Stossel writes a great piece this week in Townhall.com.

Surprises in Retail Health Clinics

New data shows that new retail health clinics are doing exactly what they are designed to do, reduce costs. From USN:

Nationally, surveys indicate that about 80 percent of patients have a regular doctor whom they see for treatment or advice. Not this group. Nearly two thirds of retail clinic patients said they didn't have a primary care physician, according to an analysis of 1.35 million patient visits between 2000 and 2007—and they account for 74 percent of total retail clinic visits. Far from disrupting the doctor-patient relationship, "[F]or these patients there is no relationship to disrupt," said researchers at RAND and the University of Pittsburgh, who authored the study.

Retail clinic patients are more likely to be female, on the young side (between 18 and 44), and uninsured than patients who visit either primary care physicians' offices or emergency departments, the study found. It's interesting that a third of retail clinic patients apparently don't have health insurance, compared with a quarter of ER patients and 10 percent of those who visit a primary care physician. With roughly 45 million uninsured, retail clinics may be attracting people who otherwise would end up clogging emergency rooms with nonemergency problems.

Doctors who've fretted that retail clinics will encroach on their business can take comfort: More than 90 percent of visits were for 10 simple conditions such as sinusitis, upper respiratory tract infections, and sore throats. Those conditions made up just 13 percent of adult visits to primary care physicians, 30 percent of pediatric primary care visits, and 12 percent of emergency department visits, according to the study.

These clinics are a great development in the health care market. It also proves that the free-market is a much better problem solver than government if government will just get out of the way. However, the special interest that enjoys the benefits of higher prices will surely fight these positive moves for the health care consumer.

Hold Our Congressmen Accountable

There is plenty we can do. For starters, you can vote for new members of congress. It is shameful that Congress has an 11% approval rating yet 90% of Americans think their Congressman is doing a fine job. Well, the truth is they are not. Incumbents are the problem.

The second thing you can do is tell your Congressman to pass a balanced budget amendment and term limits. Then eliminate 100% of all earmarks to rid Congress of special interests.

Third, let states take more responsibility for their own fiscal matters. Scale back the Federal Bureaucracy and give the power back to states. Then the states will have to compete with one another for residents. If states makes the wrong choices, they will see their people move to a neighboring state with a better system (most likely lower taxes).

Finally, people have to stop depending on the Federal Government to cover their risks. That would include aid after hurricanes, bail outs when the markets get tough, and any other program that creates morale hazard. This is not the government's money, it is tax payer's money. Unfortunately when it goes through the machine of government, it gets spit back out at 50% of it original value.

Petition Drive

Dear Friend,

Can "we the people" really save our economy? Can we really force our government to face the inconvenient truth of the $53 trillion hole we're in? That's the sum of all the US government's current financial obligations including unfunded promises for Social Security and Medicare - a $455,000 bill for every household in this country.

The answer is "YES" - there IS something each of us can do. Click here to add your signature to a letter we're publishing in the New York Times (more on the letter below).

This new movement for fiscal responsibility is just a few weeks old. And yet, thanks to folks like you, we've already made significant strides:

• Over 100,000 of you have already signed on to help us fight for fiscal responsibility in Washington and at home
• Our effort already has been covered extensively by the media, ranging from the New York Times, ABC News and CNN to literally thousands of blog mentions (source: Technorati)
• "I.O.U.S.A.," our feature documentary about the impending fiscal crisis, has made an incredible splash. Not only did the film get three and a half stars from Roger Ebert, and rave reviews from the New York Times and other critics, but it set an opening-day record for a documentary, thanks to a bonus post-screening town hall, and is about to break into the ranks of the top 100 highest-grossing documentaries of all time (source: BoxOffice Mojo).

That's right - a documentary about fiscal responsibility is about the break into the top 100! And the film is still in theaters in selected cities; check here for listings.

We've taken the first step together, and we've begun to build the movement that cynics claimed was impossible. We're sounding the alarm and America is waking up. Now, it's time to take it to the next level. Here's how you can help:

This Sunday, we'll be publishing a letter across two full pages in the New York Times calling upon the presidential nominees to move beyond the "denial" stage, recognize that America has a $53 trillion problem, and start taking steps to solve it. This letter will be signed by a bipartisan group of some of the country's most prominent leaders in finance and fiscal policy-making, and by representatives of young people's organizations around the country. You can add YOUR name by visiting www.PGPF.org today. Please help us make this letter one our next President can't ignore.

Are you on Facebook? If so, please visit the Peter G. Peterson Foundation and I.O.U.S.A. pages and become a fan today.

And finally, spread the word! Forward this e-mail to your 10,000 closest friends.

We've started a movement for fiscal responsibility - a movement few thought possible. And with your help, we will wake up America and set the nation on a course toward a more secure future and a brighter tomorrow.

All the best,

Dave Walker
President and CEO, Peter G. Peterson Foundation

PS, For more about "I.O.U.S.A," click here to see the trailer, bonus clips, and my polite disagreement with Warren Buffett!

Outrageous Ag Profits

Today Carpe Diem has a good piece on the comparison between Big Ag and Big Oil. Windfall profits are more appropriate for Soy Beans than Crude Oil. Makes you wonder why we have over $30b allocated for ag subsidies this year?

Government vs Private Sector

From Don Boudreaux at Cafe Hayek

By sending this letter to the editor of the New York Times, my friend -- and The Austrian Economists' -- Steve Horwitz shows how a serious economist assesses the politically poisoned "analysis" of a newspaper pundit:

To the Editor:

In his September 1 column (“John, Don’t Go"), Paul Krugman blames the failed response of FEMA during Hurricane Katrina on the Bush Administration’s antipathy to government. To the contrary, FEMA’s failures resulted from two problems endemic to bureaucracies no matter the party in power: a lack of local knowledge and weaker incentives than the private sector to succeed. By contrast, Wal-Mart got supplies and people into the worst-hit areas because its associates and managers had detailed knowledge of their communities and the incentive to help their neighbors that will always be absent in bureaucracies. FEMA’s warehouses of unused resources contrasted with Wal-Mart’s trucks on the move suggest that indeed the failures of Katrina were ones of bureaucratic ignorance, not administration ideology.

Sincerely,
Steven Horwitz

Economists understand that incentives matter; too many pundits think that party matters.

What happened in 1900?

This story from the AP today just confirmed the media scare tactics around global warming.

From the article:

TORONTO - A chunk of ice shelf nearly the size of Manhattan has broken away from Ellesmere Island in Canada's northern Arctic, another dramatic indication of how warmer temperatures are changing the polar frontier, scientists said Wednesday.

"The Markham Ice Shelf was a big surprise because it suddenly disappeared. We went under cloud for a bit during our research and when the weather cleared up, all of a sudden there was no more ice shelf. It was a shocking event that underscores the rapidity of changes taking place in the Arctic," said Muller.

Ellesmere Island was once entirely ringed by a single enormous ice shelf that broke up in the early 1900s. All that is left today are the four much smaller shelves that together cover little more than 299 square miles.

So what happened in 1900 that caused the ice to break apart? Was it natural? Maybe that is what we are seeing today? Of course the artcile does not go into detail about the events of the early 1900's, but I bet no one was screaming "global warming" back then.

How To Attack Bush

Now this guy truly knows how to attack Dubya.

Dubya not so bad afterall.

Too bad the Democrats got some bad information or they lied last weeks. Turns out Dubya did alright during his terms in office. For some reason I doubt this will shut up the folks from the left. From the WSJ today:

- Economic growth. U.S. output has expanded faster than in most advanced economies since 2000. The IMF reports that real U.S. gross domestic product (GDP) grew at an average annual rate of 2.2% over the period 2001-2008 (including its forecast for the current year). President Bush will leave to his successor an economy 19% larger than the one he inherited from President Clinton. This U.S. expansion compares with 14% by France, 13% by Japan and just 8% by Italy and Germany over the same period.

- Household consumption. The ICP study found that the average per-capita consumption of the U.S. population (citizens and illegal immigrants combined) was second only to Luxembourg's, out of 146 countries covered in 2005. The U.S. average was $32,045. This was well above the levels in the UK ($25,155), Canada ($23,526), France ($23,027) and Germany ($21,742). China stood at $1,751.

- Employment. The U.S. employment rate, measured by the percentage of people of working age (16-65 years) in jobs, has remained high by international standards. The latest OECD figures show a rate of 71.7% in 2006. This was more than five percentage points above the average for the euro area.

The U.S. unemployment rate averaged 4.7% from 2001-2007. This compares with a 5.2% average rate during President Clinton's term of office, and is well below the euro zone average of 8.3% since 2000.

The evidence shows that much of the Democratic Party's criticism of President Bush's economic record is wide of the mark. True, the economic slowdown now affecting most advanced countries will likely result in rising unemployment over the coming months. But thanks to sensible policies pursued by the Bush administration (not always with adequate support from a Democratic-controlled Congress), the U.S. economy is sufficiently flexible to keep unemployment below the 7.7% peak reached in the last post-recession year of 1992.

The B Hussein Tax Plan

He says lower taxes for the "middle class" but that is just more rhetoric. From The American:

Are All Of Alaska's Politicains Sucking Us Dry?

I might have been wrong about being wrong on Gov. Palin. This story from the Washington Post makes me think McCain might have jumped into this choice a little premature.

Alaska Gov. Sarah Palin employed a lobbying firm to secure almost $27 million in federal earmarks for a town of 6,700 residents while she was its mayor, according to an analysis by an independent government watchdog group. There was $500,000 for a youth shelter, $1.9 million for a transportation hub, $900,000 for sewer repairs, and $15 million for a rail project -- all intended to benefit Palin's town, Wasilla, located about 45 miles north of Anchorage.

In fiscal year 2002, Wasilla took in $6.1 million in earmarks -- about $1,000 in federal money for every resident. By contrast, Boise, Idaho -- which has more than 190,000 residents -- received $6.9 million in earmarks in fiscal 2008. All told, Wasilla benefited from $26.9 million in earmarks in Palin's final four years in office.

In February, Palin's office sent Sen. Stevens a 70-page memo outlining almost $200 million worth of new funding requests for Alaska.

So the hand outs do not end with Rep. Young and Sen. Stevens. This kind of ear mark abuse is what McCain is trying to end. Now his running mate appears to be one of the abusers.

Sowell Must Read

Sowell puts the B Hussein rhetoric to task.

Barack Obama's "change" is a recycling of the kinds of policies and rhetoric of the New Deal that prolonged the Great Depression of the 1930s far beyond the duration of any depression before or since.

These are the same kinds of liberal policies that led to double-digit inflation, double-digit interest rates and rising unemployment during the Carter administration. These are "back to the future" changes to economic disasters that need repeating.

Media Pessimism

The advertisement is the most truthful part of a newspaper.

Thomas Jefferson

TJ of course says it best. However, there is a good piece in the WSJ that does a pretty good job as well.

And Now a Moment of Realism
Barack Obama during his acceptance speech played a riff on Phil Gramm's impolitic remarks about a "mental recession" and a "nation of whiners." Like a succession of Democrats at the podium, he painted the economy in the darkest, most hopeless of colors -- never mind that the economy is actually growing and unemployment is still lower than it was during much of the Clinton presidency.

Job security and job satisfaction are both high in America too. "In Gallup's August 2008 survey, 48% working Americans said they were completely satisfied, and another 42% somewhat satisfied. Only 9% were dissatisfied with their jobs." And sorry, Lou Dobbs, that war on the middle class and the outsourcing of America that you complain about every night? Americans aren't buying it. Only 8% worry about their jobs being outsourced to foreign competition. Scott Hodge of the Tax Foundation tells me this squares with the economic data. "Very few jobs are lost each year to companies moving jobs offshore," he says.

Campaign 2008

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