The first rule of politics: Treat the symptom, not the cause. From an Investor’s Business Daily editorial : “Overhauling the banking system without fixing Fannie and Freddie is like fighting terrorists without attacking the jihadi ideology motivating them.” Be adults? GE’s Jeffrey Immelt on Goldman : ““People need to tone down the rhetoric around financial services and stop the populism and be adults.” That is so 19th century.
If they want to marry, why should the state prevent them? Here is a depressing story by John Crawley of Reuters, recounting the absurd political interference with the merger of United Airlines and Continental Airlines.
Repealer-General This is a truly statesman-like innovation, provoked by our governmental growth. We need a public official who has no responsibility except recommending laws and regulations to be repealed. Indeed, if we could invest the office with sufficient probity, I would like to see the gentleman given a sort of veto, which only a two-thirds majority could override.
Environmentalists Seize a Chance to Oppose Human Production According to an NYT story , “BP officials said on Sunday that about 15,000 barrels of oil from the gulf spill was collected by its containment cap on Saturday, bringing the total since the device was installed to more than 119,000 barrels, or about 5 million gallons.” But the meaning our culture takes away from Deepwater Horizon spill will not be one of human triumph over adversity. Regardless of what engineering triumphs are performed, the message is going to be one of human impotence and need to reject industrialism.
BP CEO Tony Hayward testified before the House Energy and Commerc Committee. It did not go well. Given that the U.S. Attorney General has announced an investigation into possible criminal charges, it seems noteworthy that no one thought to read Hayward his Miranda rights. Indeed, the congressmen rather seemed to expect he should make a wide variety of assertions on the basis of which he and others might later be pilloried, sued, and jailed. The highlight of the committee session was the assertion by Rep. Joe L. Barton (Republican of Texas) that the $20 billion escrow account BP has agreed to set up under threat from President Obama was “a shakedown.” This is what is known in Washington lingo as a “Kinsley gaffe.” (The term arises from a remark by Michael Kinsley: “A gaffe is when a politician tells the truth.”)
A story by Don Clark and Kara Scannell (of the WSJ) suggests that the investigation into Dell (mentioned yesterday) will bring to light the question of Intel rebates. "Such rebates have been a focus of government antitrust suits against Intel in the U.S., Europe, Japan and South Korea, which allege that the chip giant has improperly used financial incentives to its customers to discourage major computer makers from buying chips from rival Advanced Micro Devices . Intel denies the allegations, arguing that the rebates it gives customers are a lawful form of price discounting to meet competition."
Jeff Skilling Speaks Out. Fortune magazine carries a prison interview with the former CEO of Enron. Regime Uncertainty. Washington Post columnist Robert Samuelson is beginning to realize that demonizing business makes people reluctant to do business. “Given the housing and financial carnage, most of today's cautiousness and risk aversion-by both businesses and households-were unavoidable. But the Obama administration's anti-business rhetoric and controversial health ‘reform’ may have compounded the effect. These created uncertainties and, in the case of health ‘reform,’ raised the cost of future full-time employees. The administration believes these policies don't jeopardize the economic recovery. Historians may conclude that the goals were at cross-purposes.”
There has to be some word that conveys a level of effrontery far beyond “gall,” “brass,” “nerve,” and “chutzpah.” We need a concept that is capable of referring to Saddam Hussein’s practice of shooting political opponents and then charging their relatives for the cost of the bullets. And we need this concept right now, in order to refer to U.S.
German Chancellor Angela Merkel is not returning U.S. President Barack Obama’s calls. I’m being theatrical. Obama is demanding that Germany pull its weight in the global-recovery effort by aping the U.S.: spending more and producing less.
For Once, Thomas Frank Gets It Right. Commenting on Joe Barton’s description of Obama's demand for an escrow fund, WSJ columnist Frank wrote : “And this, in turn, is merely an expression of the permanently upside-down political universe of the right, in which the law is criminal, cynicism is a form of idealism, and bleeding-heart liberals are really soulless monsters in love with the power of the state for the same reason that gangsters are fond of their Uzis: because it is the weapon that allows them to plunder and loot the productive members of society.” I could disagree with a word choice here or there: For “law” substitute “politician’s arbitrary demand” and for “cynicism” substitute “the virtue of selfishness.” But other than that, yeah: basically correct.
I do not think I am indulging in the broken window fallacy to call attention to this story by Nicole Norfleet of Associated Press regarding the improved prospect that the Gulf oil spill has brought to non-Gulf shrimpers. The broken window fallacy says that destruction is economically advantageous because it gives work to those who must restore the former infrastructure. In the case of the Gulf oil spill, the broken window fallacy would be involved if one cited the economic benefit now being given to those employed in stopping the oil leak and cleaning up its consequences.
UK “Office of Fair Trading” to investigate IPO offerings. According to a story by Erik Larson (of Bloomberg.com): “Britain’s antitrust regulator plans to investigate fees charged by investment banks for arranging initial public offerings and rights offers, work that generated 2 billion pounds ($2.9 billion) for securities firms last year. “The probe, which will start later this year, will include fees, rights issues and other types of equity-raising following complaints of “dissatisfaction” from corporations, the U.K. Office of Fair Trading in London said today in a statement. “
Were there compelling factors—other than improving aviation security—at work in the passing of the Aviation and Transportation Security Act (ATSA) of 2001? Yes, says attorney James Slepian, who as a law student in 2003 penned the first legal analysis of three key sections of the act, including the little-known “Section 108.” (James is the son of Charles Slepian.) The responsibility for federalization fell to the newly-formed Transportation Security Administration (TSA). By 2003, some $12 billion had been spent on the hiring and training of 60,000 new federal workers. Slepian observes that by setting the hiring bar low, individuals who worked as screeners before 9/11 could be re-hired under the supposedly elevated standards.
Apparently, the SEC has been investigating certain financial relationships between Dell Computer and Intel Corp. All that is being reported (by Miguel Helft of the NYT ), and his sources are mostly anonymous, is that the matter relates to “how Dell accounted for payments and rebates that it had received from Intel.”
Brooke Sopelsa (CNBC) writes that “about 6,000 claims have now been filed against BP since its massive oil spill in the Gulf of Mexico, and hundreds of them have been filed by Robert Gordon, chief trial lawyer for Weitz & Luxemberg, on behalf of fishermen affected by the spill.” Gordon is quoted as saying: “It may be a generation before they’re able to go out and fish the way they were before.”
Royalist Trust-Busting Annually on this date, the Justice Department honors the founder of the FBI: Charles J. Bonaparte--yes, those Bonapartes (he was the great-nephew of Napoleon I). As Attorney General under Theodore Roosevelt, Bonaparte was an ardent trustbuster. This anti-business alliance of American and French aristocracy reminds us of the truth the anti-bourgeois movement is very often a movement ostensibly for plebians but led by patricians. Surprise: Demonizing business is bad for business Tad DeHaven of the Cato Institue takes note of a Washington Post editorial that seems to flirt with the concept of “regime uncertainty.” That is the view that says: When you h
Independent Review has published an article by Bruce Yandle on the cause of the financial meltdown. The Gulf Spill An excellent article by Richard Epstein, as usual, on why punitive damages and criminal prosecutions are undesirable in the BP case.
Having recently learned about the show American Greed , I thought it worthwhile to make one general point about that concept, “greed.” It is a complete red herring. It implies that the pursuit of money is what makes many bad actions bad, and conversely that the pursuit of money is capable of making otherwise good actions morally dubious. And that is just not true. Money is not a moral pollutant of action. MINAMPOA! (Pronounced min-am-PO-ah.)
The Only Safety is Absolute Terror From an NYT article by Andrew Ross Sorkin: “The [credit-rating] agencies have a long history of getting it wrong. Enron, WorldCom, Penn Central—the ratings agencies always seem to be a day late and a dollar short. Yet since the 1970s, the ratings agencies have been imbued with a special government status—Nationally Recognized Statistical Rating Organizations, they’re called—and a whole body of regulation has been written that revolves around ratings. Mutual funds, to cite one example, can hold only securities that have the highest investment-grade ratings.
Ever since the Deepwater Horizon spill began on April 20, commentators have been playing the game of “what if?” What if George W. Bush were in office: Would criticism of the president be harsher? The answer is: of course. Most commentators and analysts understand that President Obama embodies that elite intellectual class—“the adversary culture,” in Lionel Trilling’s term—that despises commercial and industrial civilization. Consequently, people reasonably presume that he neither has nor will cut BP any slack—indeed that he will not even deal with it justly. Were President Bush in office, the opposite presumptions would prevail, and rightly so.
