Club Tril

No substantive post for today, but I urge everyone to follow Mark Titu's "Club Trillion" blog. Not only does he worship Bill Simmons as I do, but I can easily call Titus the funniest person on the internet. Enjoy!

Blago

Now that the Rod Blagojevich media blitz is in full gear, I thought I should devote a bit of time to him. Those of you used to long entries will probably thank me for today's brevity. 

Politico contributor George Simon's "The Rod Blagojevich Show" puts a dry and witty spin on the situation. At the end of the article, he maintains that Blagojevich is innocent until proven guilty, but in the same sense as Bernie Madoff. Only time will tell, but Blagojevich may be trying to soften up a future jury for a criminal trial. It doesn't appear that way from his comments, but if Blagojevich is anything, he's calculating. OK, he's well-coiffed as well. I'm just surprised he didn't shed a tear with the ladies of "The View."

$10 House

I'm not talking about a shanty, playhouse, or doll house. I'm talking about a $13.7 million seaside mansion on Juniper Island in Florida. The lucky buyer? Ms. Kathleen Fuld, better known as Mrs. Richard S. Fuld, wife to the former Lehman Brothers chairman and chief executive. That's right, the house was recently transfered from husband to wife for 10 bucks. This isn't just fishy, it's killer whaley. It's the oldest pre-bankruptcy play in the book, but with a transfer price of $10, it isn't going to work, even with some of Florida's protectionist laws for homeowners. The insanity continues for Dick Fuld. 

First Weekly Address

Below is a video of President Obama's first weekly address to the nation. In this address, he outlined his recovery plan and warned against inaction in these trying times. 

I really liked the proposition of a new, smarter energy grid. Part of the reason the United States has an energy problem is because we use energy so inefficiently. Hopefully a smarter energy grid will help resolve this problem. I also liked the idea of putting medical records online within five years. I'd prefer if this was done by someone other than the federal government (Google offered to do so - FOR FREE), but I think it's a step in the right direction. Maybe now when I go to the doctor I won't have to fill out the same five-page form for the umpteenth time. Finally, I strongly support recovery.gov, a website that will outline where every dollar goes in the stimulus package. Hopefully President Obama and his administration can win back the trust of the American people after eight years of secrecy and obfuscation under President Bush.

That said, I didn't like his infrastructure improvement programs. While I'm sure President Obama has good intentions, this approach hasn't worked in the past. It didn't work for FDR, local and state governments, or even the Japanese. The twentieth century is littered with examples of this policy failing to bring about substantive results. It might be a psychological boost for those who are back at work, but that's all it is. Also, I don't think the answer to solving our educational problems is more money. Compared to other nations, we spend by far and away the most per pupil, yet receive mediocre math and science results. It's not about the money. It's time to start looking at school administrators, teachers, parents, and the students themselves. There is more than enough blame to go around.

So that's my take. Your thoughts?

War on Drugs

OK, so here it is, my favorite piece thus far! Radley Balko's "The Drug War's Collateral Damange" gives a good history lesson on the "war on drugs," a term coined by President Richard Nixon in 1971. In his article, Balko argues that said war "militarizes our police, enriches our enemies, undermines our laws and condemns our sick to suffering." I couldn't agree with him more. Nixon argued that the American people must accept collateral damage in the drug war to improve society. Unfortunately, we've sacrificed everything, but have seen virtually no positive results. I'll give you a hint as to how well the war on drugs is going. The government can't keep illegal narcotics out of buildings surrounded by armed guards, barbed wire, and twenty-foot high fences in which every person or piece of mail entering the facility is scanned and searched. Yes, drugs are even a reality inside prison. 

Billions of dollars have been thrown at the war on drugs. Where has all this money gone? Well, our tax dollars have funded thousands of new SWAT teams, civil wars in Mexico, disaster in Colombia, environmental degradation in Ecuador, anti-Americanism all over South America. The drug war has also served as the Taliban's greatest financial supporter and recruiter. If that isn't enough for you, Steven Duke, a professor at Yale University Law School claimed that the Fourth Amendment has been "virtually repealed by court decisions, most of which involve drug searches." Large amounts of cash can now be confiscated on suspicion of drug involvement. A greater percentage of Americans are in prison than ever, with over ten percent of inmates imprisoned on non-violent drug charges (trafficking or possession). Murder rates? Higher than ever. 

Moreover, as Balko points out, it is just as easy now to get an illegal high as it was in 1919 or 1971, maybe even easier. Even if the drug war were successful, would it be worth the costs? I don't think so. We might as well legalize and tax drugs. Much as I despise it, we have to pay for the welfare state somehow.

Cliffnotes: The Economy

As the stimulus is discussed on Capitol Hill, and politicians race to microphones to call this the worst economic downturn since the Great Depression (worse than 1982?), most Americans are left to wonder whether the stimulus will actually work. We all know it will be extremely costly, but will the stimulus stimulate? Bruce Bartlett (no relation), a contributor to Forbes Magazine and former Treasury Department economist, wrote a terrific article outlining America's economic downturns since the Great Depression, the steps taken by the government in reaction, and the consequences. It's a guide to American economics, the cliffnotes version. 

Not surprisingly, the government and its agencies usually drop the ball. Neither the Federal Reserve nor Presidents Hoover or Roosevelt could correctly time monetary and fiscal policy measures to effectively fight the Great Depression. It was blind luck that WWII forced FDR to play a winning hand. Keynesians sent inflation to the moon in the 1960s and 1970s by thinking that budget deficits were the answer to every problem. Finally, investors inflated a bubble in the 1990s believing that the "Greenspan put" would never allow it to pop. Talk about when genius failed. Testifying before the House Government Oversight Committee last October, Alan Greenspan admitted to "flaws" in his policies and philosophy in wake of a "once in a century credit tsunami." Astute observation Alan. 

Will the stimulus stimulate? No one can be sure right now, but there is a lot of infighting among economists all across the US. In this case, the Bartletts think alike in that both of us believe controlling inflation following the stimulus will require deft touch. I sure hope it works by 2010. I need a job!

Karma

Walking to class yesterday, I was approached by a man hawking a book on Eastern philosophy and spirituality. I listened to his spiel, brushed aside his request for a donation, and went on with my day. Ironically, I was reminded of that man after my Dad sent me an article from today's Wall Street Journal.

Over the past six months, I have checked Yahoo! Finance's currency page religiously. I have prayed for a global slowdown, lower oil prices, and complete carnage in hope that investors all around the world would flock to the US dollar as a safe-haven, no matter how bad our situation is. Lesson learned: sometimes when you pray for the worst, your prayers are answered. Following the Royal Bank of Scotland's jaw-droppingly horrendous earnings estimate, the pound fell to a twenty-five year low against the US dollar. (1.36 USD/GBP) Economists estimate that UK GDP could fall by two percent for Q4 '08. A deflationary period is right around the corner. As far as I am concerned, London, the overcast city of pessimism, is all smiles and sunshine. Life couldn't be better for us Yankees in the UK. 

While the exchange rate could very well reach 1.20 USD/GBP by the time I leave, I fear that the dollar will only be strong in the short run. Karma will probably punish the greenback for my malevolent wishes. With trillions of dollars of recently-created currency sloshing around unmonitored, it's easy to see a scenario where the dollar loses significant value as the economy recovers. Since the inception of the Federal Reserve in 1913, the dollar has lost 96% of its purchasing power. Let me repeat, ninety-six percent! I say it goes even lower, any takers?

The national debt has burgeoned to $10 Trillion and is expanding everyday. Economists estimate that if current spending patterns remain the same, the national deficit will be 400% of US GDP by 2050. How long until our credit rating is cut? It's a scary thought. Unless there is real change (a drastic cut in the size of government, the end to an interventionist foreign policy, etc.), the dollar's days of strength are numbered. Don't say I didn't warn you. Karma's a bitch.