re: "Senate Again Blocks Bolton" (LA Times, 6/21/05) http://news.yahoo.com/news?tmpl=story&u=/latimests/20050621/ts_latimes/senateagainblocksbolton To the Editors: President Bush should not hesitate to use a recess appointment to get John Bolton to the United Nations. Taking time an energy now fighting this battle are draining the energy from Social Security reform as well as making Bush look vulnerable to a fight over a future Supreme Court nomination. Democrats' claims that Bush is dictating to a co-equal branch of government demonstrates a willful misunderstanding of the roles of the executive and legislature. "Advice and consent" does not mean that the Senate does or should have equal influence over nominations of any type. Just because branches of government are equal or serve as "checks and balances" on each other does not mean that they all have equal influence over every decision or process. Joe Biden and others are making fallacious Constitutional arguments in order to bolster their purely political filibuster of John Bolton's nomination. Instead of wasting his breath arguing with the Democrats, Bush should work on serious policy issues and simply appoint Bolton while the Senate is in recess.
PUBLISHED in the Boulder Daily Camera, 6/27/05 http://www.dailycamera.com/bdc/letters_to_editor/article/0,1713,BDC_2491_3884864,00.html re: "Charter schools less diverse" (Boulder Daily Camera, 6/18/05) http://www.dailycamera.com/bdc/schools/article/0,1713,BDC_2488_3865541,00.html and "Schools try to promote diversity" (Boulder Daily Camera, 6/18/05) http://www.dailycamera.com/bdc/schools/article/0,1713,BDC_2488_3865543,00.html To the Editors: I am not surprised to hear State Senate Democrats struggling to find a way to complain about charter schools. Teachers’ unions, like most unions, are about their members and not their customers. Unfortunately, the victims are Colorado’s students when CEA apparatchiks care more about their budgets and political power than the effects of their machinations on students. Senate Education Committee vice-chair Bob Bacon’s recent election is the subject of a lawsuit alleging illegal use of public employees and resources for a political campaign. This is how the CEA “works” to elect Democrats so they can protect each other. The union opposes competition in the education system, including charter schools which make standard schools look bad. So instead of noting that most charter schools do better than local peers in academic and overall performance, Democrats whine about how the schools are not diverse enough. Diversity is a fine goal, but it must be secondary to learning how to read and write. Why should we hear complaints that one Lafayette school is less diverse without also hearing that it gets a better overall rating from the Colorado Department of Education than its neighboring school? Both Boulder charter schools mentioned (as more diverse than some others!) rate Excellent from CDE, equal to or higher than other Boulder public schools. Joan Fitz-Gerald’s complaints about diversity are simply a ploy to attack charter schools and strengthen the political power of the CEA and Democrats. Actual education doesn’t enter the discussion. When schools are run by bureaucrats who prefer to count kids by skin color than to notice that “Johnny can’t read”, it is time for an educational revolution including new leadership in the Senate.
I'm going to try a little something new: In order to give myself a break from so much typing (and thinking) about politics and economics, on Sundays from now on I will instead post a travel photo with a brief description of the scene. I hope you enjoy it. Please feel free to e-mail me with any questions about desinations I've been to. I'm happy to offer opinions, advice, etc. Today's picture comes from Bhutan. Bhutan is an amazing little country, completely mountainous, between northern India and Tibet. You can get a good idea of its location on this map. I believe this particular picture was taken near Punakha, though I don't remember with certainty. You can see where Punakha is on this map. It is one of my two favorite countries to visit (the other being Namibia). The people are friendly, devoutly spiritual (essentially Tibetan Buddhism), unscathed by many of the vices of the modern world yet keenly aware of its existence and their need to compete. Bhutan is a hereditary kingdom, the world's only Buddhist kingdom. The current King is writing a new constitution which will give up many of his powers to an elected legislature. The people are generally not pleased about this because the King is absolutely beloved. Almost every house and business has a picture of the King in it somewhere, and not because they have to. In order to raise money and to keep tourism to levels which their infrastructure can handle, the government charges a large fee to visit. Essentially, you pay a Bhutanese tour operator about $220 per person per day. The government takes about 1/3 of it, and with the rest the tour operator buys your hotel room, food, guide, car and driver. You can't say you don't want a car and driver and guide so you'd like to pay less. As of recently some very high end hotel companies are setting up in Bhutan which should be great for those who can afford $1000 per day. This is mostly occuring because the government has made it easier for foreigners to do business in Bhutan by taking on a Bhutanese partner. If you ever get a chance to go, it gets my higest recommendation. Note that all of Bhutan is at fairly high altitude, maybe 8000-10000 feet, so keep that in mind if you think it might be a problem. So, with that foreword, here's the picture for this week, taken by my wife, Kristen, in October, 2003: This is an old Buddhist man spinning is prayer wheel at a temple in central Bhutan. Buddhists walk around their temples (or around a courtyard inside the temple) spinning their prayer wheels or spinning large prayer wheels built into temple walls. One must walk clockwise around the temple, without a hat and often without shoes. People are usually meditating, praying or chanting while circumambulating (walking around).
See "Global Warming Heats Up in Senate" (FoxNews.com 6/16/05) http://www.foxnews.com/story/0,2933,159835,00.html This interesting article by Steven Milloy of www.junkscience.com analyzes legislation under discussion in the Senate, presumably to address global warming but really based on bad science and corporate manipulation. It's a pleasure to see Senator Inhofe (R-OK) continue to stand up for scientific and economic logic. I wish he weren't so alone in this pursuit....
see "What the Mortgage Next Door Means" (Business Week Online, 6/16/05) http://www.businessweek.com/bwdaily/dnflash/jun2005/nf20050616_1189_db016.htm? Business Week is out with yet another in their long line of articles about the "overheated housing market", focusing this time on interest-only mortgages. Quoting from the article: "San Diego led overall with 47.6% of home buyers taking out interest only mortgages, up from 1.9% as recently as 2001." As I've said several times, I also think the market is overheated, but I think ending that situation will take a long time...and that the resulting bear market in real estate will last longer than people expect, just as the bull market has. Some argue that changing demographics have truly altered the nature of the housing market. There maybe be some truth to that, but I don't believe these prices are sustainable. It seems to me like a game of financial musical chairs, and quite a few people are going to be caught without a place to sit. On the other hand, the Philadelphia Stock Exchange's Housing Sector Index (symbol: HGX), made an all-time high today (see this chart)...and stocks are supposed to be forward looking. People who have bet against housing by shorting homebuilders' stocks have been run over by the housing freight train. It's like trying to short the Nasdaq in 1999. You probably remember what eventually happened to the Nasdaq. It only went down after most who had bet against it had been squeezed out. (Obviously people aren't short actual houses, so we are not seeing a short-squeeze in house prices...though we may be in housing stock prices.) My guess is that we will not see housing prices fall until after we see a sustained sell-off in the HGX, but timing that sell-off can be hazardous to your health. I don't expect the sell-off in real estate to be as drastic as Nasdaq in 2001-2002, but I do expect it to be just as painful for many Americans and to be a major weight on our economic confidence when it comes.
see Patriot Act Critics Laud Vote to Limit Use (NY Times, 6/16/05) http://www.nytimes.com/aponline/national/AP-Patriot-Act-Libraries.html? and "House defies Bush, votes to change Patriot Act" (Washington Times, 6/16/05) http://www.washingtontimes.com/national/20050616-121816-9276r.htm To the Editors: As a libertarian-leaning Republican, I never thought I would say this: Bernie Sanders and Jerrold Nadler are exactly right. The Patriot Act goes too far. The FBI should be required to get a judge’s approval for search warrants and wire taps. At the very least, fishing expeditions such as searching library records and bookstore purchases without judicial review should not be allowed. I applaud the Republicans courageous and wise enough to vote with Democrats to allow this provision of the Act to expire. The concept that this is a road map for terrorists or that libraries would become “safe zones” is simply laughable. Such rhetoric insults our intelligence (and our Intelligence.) As Benjamin Franklin said, "They that can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety." In case people forget, Franklin said this at a time when there were foreign soldiers attacking our citizens on our soil, unfriendly countries on our borders, and a large percentage of the American population supporting the invading forces. The Founders, true Patriots, were wise enough not to create an 18th century Patriot Act even in circumstances that extreme. President Bush should take a deep breath and realize that he risks damaging the very thing he is trying to protect, a nation “with liberty and justice for all.” [It's too bad we neither of our major political parties actually believes in liberty. I wish more people knew about the Libertarian party, and I wish the Libertarians had better positions on immigration.]
see "Republicans say Social Security vote is unlikely" (Washington Times, 6/16/05) http://www.washingtontimes.com/national/20050616-121816-4455r.htm Social Security Reform has lost most of its momentum, with House Republicans now saying they're hardly talking about it and they don't expect action this year. With the exception of principled members like Mike Pence (R-IN) and Paul Ryan (R-WI), our Representatives simply don't want to make a difficult vote despite the importance for the country. But I understand their cowardice...they have their jobs to protect and they have not been given particularly good political cover. The blame for the current situation lies squarely with President Bush and his advisers on Social Security who have spent far too much effort talking to people about investment returns and when this line crosses that line instead of emphasizing inheritability, choice, fairness and even the basic human dignity involved in controlling the results of one's own labor. President Bush will not and should not give up, but he needs to make personal calls to members of Congress and get out there with a much more passionate and compelling message. The Iraq situation will go away, but Social Security Reform is forever. Don't think that W hasn't realized that.
[A good friend of mine who comments on this site as "The Freak" offers this discussion of the current state of understanding about the judicial system, and the historical context surrounding it.] The recent discussion on judicial appointments – from talk of filibusters to discussion of “nuclear options” – points to a fundamentally flawed approach to the law and an upside-down perspective of what it means to be liberal and conservative. The former is driven by an irresponsible focus on outcome over process while the latter is related to a misunderstanding of legal development; both are rooted in an overwhelming congressional failure to understand the proper legal historical context coupled with a failure to exercise even minimal leadership. Our legal system evolved from the tradition of Roman law and our understanding of the source of laws derives from Roman legal notions. The Roman legal system recognized different sources of law; at the risk of oversimplification, these can be classified as natural law (or law of nature), positive law, and the opinions of the learned (jurists). The law of nature is what was considered essential and inherent in the very dignity of being a human. When Jefferson wrote “We hold these truths to be self-evident” he spoke of natural law. Most people still acknowledge the existence of fundamental rules and rights; whether these originate from their Creator or merely from the dignity that societies of men award their own is irrelevant to their existence. Positive law is law enacted by those possessing legislative power. Roman law vested legislative authority in the senate, consuls, governors, plebes (from whom comes the term plebiscite) and other similarly situated legislative groups (later, the emperor). Roman tribunals also recognized the opinions of noted jurists (teachers of law, respected practitioners, judges, and authors of meaningful legal work) as having the binding force of law. One of these, Gaius, even provided in his treatises on the laws a rule for resolving differences of opinions amongst these learned men. The study of Roman law languished briefly after the fall of the empire and was revived at the university in Bologna during the eleventh century. During its revival, traditional concepts of Roman law were integrated with Church law and thus gave birth to European Common law (ius commune). Support for traditional sources of law began to lose steam, however, as legislators increasingly flexed their legislative muscles. Sovereigns, both clerical and secular, eroded the notion that legislative authority could be found in natural law or in the opinions of experts. The final blows in favor of legal positivism were delivered by Jeremy Bentham and John Austin in the eighteenth and nineteenth centuries. They argued that sovereigns were not bound by natural law or any other precepts; laws were mere commands given by one person (or group) to another. The power to issue such commands rested solely with those affirmatively vested with legislative authority. This idea – that people are sovereign and endowed with a natural power of self-determination – rapidly revolutionized legal systems across the world. As a result of this sea-change of legal philosophy the great democracies of the world (Spain, France, Germany, Italy, and Japan among others) did away with the last vestiges of the ius commune and created codes of law, including extensive constitutions. The codes, promulgated by their respective legislators, are an exhaustive representation of the will of the governed. Under these systems judges become mechanical interpreters and applicators of these laws; fundamental rights (natural law) are either explicitly included in codifications or do not exist (they are not presumed or implied against the expressed will of the nation). This great legal innovation impacted the United States but only partially and therefore left us in an ambiguous state. We have codified many laws but still cling to the outmoded idea of stare decisis, the idea that legal precedent makes law. Much of our legal system is still built on the medieval, paternalistic idea that wise, learned judges need to temper the irresponsible impulses of the masses; our representative government is thus partially democratic, our vote is devalued. Under this analysis then, Supreme Court justices like Antonin Scalia and Clarence Thomas are truly liberal. They embrace the notion that laws represent the will of the people and that judges are mere servants of that will as it is expressed. They view the law within its four corners and apply it mechanically; if the people – duly represented by their legislators – don’t like the outcomes, they have the power to change them through the legislative process. At the other side of the spectrum are justices such as Ruth Bader Ginsburg and Stephen Breyer. By clinging to the older philosophy of Roman and medieval legal scholars (the idea that the natural law and the opinions of jurists can legislate and in effect augment positive law) they are clearly conservative. They are more concerned with outcomes (in terms of the specific impact of individual cases but also, more broadly, in terms of public policy) than the written law. This archaic approach dilutes the American people’s self determination and trivializes our contribution to the democratic process. The fact that liberal judges yield conservative outcomes and conservative judges yield liberal outcomes is inevitable. The law is necessarily conservative and adherence to it must perforce lag the legislative process. Yet this sorry state of affairs is entirely within the congress’ power to change! The very first sentence of the constitution provides them with all the authority they need. Congressmen must explicitly legislate the outcomes the American people (whom they directly represent) expect, make rules of interpretation clear and demand that judges obey the law. Anything less will continue to disenfranchise the people and further lead to bitter senate confirmation disputes that are not focused on a judge’s juridic skill but on his political views. This is legislation by proxy and a paternalistic, obsolete, medieval model of government; the American people deserve better. The Freak
Fannie Mae and Freddie Mac regulation: Republicans acting like Democrats...more dangerously than usual
see "Mr. Oxley's Slush Fund" (Wall Street Journal, 6/14/05) http://online.wsj.com/article/0,,SB111870629834158611,00.html "House Committee OKs Bill Cracking Down on Fannie Mae, Freddie Mac" (The Washington Examiner, 5/25/05) http://www.dcexaminer.com/articles/2005/05/25/business/03business26fannie.txt "Republican paper calls for GSE portfolio limits" (Reuters, 6/7/05) http://www.reuters.com/financeNewsArticle.jhtml?type=bondsNews&storyID=8720592 "Regulating Fannie Mae and Freddie Mac" (American Enterprise Institute, 5/13/05) http://www.aei.org/publications/pubID.22514/pub_detail.asp For several years there have been calls for reform of Fannie Mae and Freddie Mac, the quasi-governmental mortgage giants. Because of their implied Federal guarantees, these companies seem to take much more risk than any similar independent company would, taking huge positions in mortgages with less reserve capital than is required for similar organizations. Both companies have expressed willingness to accept stricter regulation of their portfolios and capital requirements, and Alan Greenspan has recommended that these steps be taken. According to the American Enterprise Institute (see link above), "To place this in some perspective, all Treasury debt held by the public totals $4.4 trillion, and all corporate bonds outstanding total $2.9 trillion. Fannie's and Freddie's liabilities--including both their MBS guarantees and their borrowings--come in right in the middle, at $3.7 trillion. Thus, only two companies--both of which are GSEs and implicitly backed by the U.S. government--account for more default risk than all other U.S. corporations combined. The risks for the taxpayers are obvious, but as many commentators have also pointed out, risk of this size, if concentrated in only two companies, poses a danger to the U.S. economic system as a whole--a danger known as systemic risk." The Republican Policy Committee has said that the $1.5 trillion mortgage portfolios held by Fannie and Freddie serve "no credible purpose". (According to the Reuters report noted above.) Note that while I am not generally a fan of regulation, this is a special case because these companies operate under the protection of the government and thus do not operate constrained by financial prudence which most private or public companies must exercise to survive. Furthermore, if a company is going to rely on taking our tax money to cover their future disasters, we should have the right to minimize the chance and scale of such disasters. Essentiallly the government is allowing Fannie and Freddie to generate higher profits for its shareholders by using citizens as unwilling or unknowing insurers of their portfolios. I'm all for profits, but they must be earned fairly and not on the backs of taxpayers. Along comes the House Financial Services Committee, chaired by Rep. Mike Oxley (R-OH), which has decided to approach the problem by establishing a new regulator without enough power to control the size of the companies' portfolios. Even the Bush administration, no fan of corporate regulation, says the bill is simply too weak. But it gets worse, the bill includes a provision for the companies to contribute 5% of their profits to non-profit or for-profit organizations which develop or finance low-income housing. It's ironic that the Washington Examiner (see link above) says that "efforts by Democrats to reshape the bill generally failed in the GOP-controlled committee." It's hard to imagine a proposal more redistributive (socialist) than this; the Republicans have done the Democrats' work for them. The Wall Street Journal estimates this payola for the housing industry and liberal social groups at $3 billion over five years. Not only does this bill do nothing to address the fundamental risks to our economy of the way these companies operate, and not only does it not limit the potential bill to the taxpayers, but it then turns the companies into cogs in the welfare state machine. The reason the 5% provision is so dangerous is that it will then cause Democrats to argue against reform of Fannie and Freddie because limiting their ill-gotten profits will "hurt the poor". The Republicans will argue against reform because the 5% goes to their friends in the housing industry. If the government can grab 5% of this pot for their pet projects and the welfare state, what government program might next be expanded (or at least not kept in check) under the watchful gaze of Congress, with knowing winks between the do-gooder Democrats and the Republicans who never saw a business subsidy they didn't like. With "divided government" like this, who needs cooperation?
See "Memo Seems to Link Annan to Contract of Son's Company" (NY Times, 6/14/05) http://www.nytimes.com/2005/06/14/international/14food.html http://www.msnbc.msn.com/id/8216602/ A 1998 memo has surfaced written by an executive of Cotecna, the Swiss company that had hired Kofi Annan's son, Kojo, as a consultant which seems to describe a meeting between Kofi Annan "and his entourage". Shortly after the memo, Cotecna got a major oil-for-food contract from the UN. It's hard to understand how the Volcker commission would have missed a potential smoking gun like this, but now that they have it all we can do is wait to see if it means what it seems to. To mix metaphors, if this smoking gun is the missing link, I would expect we'll very soon start hearing the chatter about Bill Clinton replacing Kofi Annan as Secretary-General.