patrick.net

Peter P wrote : Knowledge and technology just allow us to destroy ourselves faster.

I completely agree with that , especially for developed countries.
What is our goal as a nation ? our level of happiness has stagnated many decaded ago. GDP growth is no longer increasing average happiness because GDP growth is not related to happiness after certain standard of living is met in a nation. so what are we trying to achieve here except consuming more and more to satisfy the never ending need for hierachichal superiority in the society. Everybody is busy producing just to consume more.
In the end, i hope our history is not written as a species which used its brain power just to consume the resources on earth faster than other animals, eventually hastening its demise as a species.
Its high time , we get our priorities right and re-think our debt based ever expanding economy.

Its high time, we get our priorities right and re-think our debt based ever expanding economy.

Sadly, we will never do that. Humans tend to push the system right towards its breaking point. The future for humanity is very grim.

That said, we as individuals ought to be optimistic. Want beer? :)

Happiness is expectations matching reality.

So long as we have unsatisfied wants, we will remain unhappy. No amount of technology can change that. In fact, expectations of technology improving our lives will only lead to yet more disappointments.

Emotionally, we are doomed.

Interesting stat, since I thought I was alone in not being able to vote this time around. It turns out 25% of AOL users who answered a survey said they have already voted. I voted by mail about a week and a half ago.

Interesting, people can't wait. I think they can't wait to crucify their representatives for voting on the bailout plan.

Oops, I meant to say "not being able to wait to vote."

Yen is pushing its March 14 high. WHat do you guys think?

MST

Might want to run those numbers again as a % of GDP and % of GDP growth, which is really what matters with deficits.

In fact, run that back to Eisenhower and you might be surprised to find out there is no correlation between party affiliation and deficit handling capability. Both parties have done greater and lesser damage along the way.

Partisanship has a terrible tendency to fool people into thinking that there is always another side. Sometimes it just is what it is, regardless of demagoguery.

Pete:

Yen is the only major currency that wasn't internally engaged in CDO/MBS/CDS BS (since they already did that to themselves 15 years ago) so its strength relative to other currencies is (and was) predictable. As far as other factors, Japan is also not a commodities producer, so they're not in that camp either (look at Canada). Gonna be a bitch on their exports, though.

Relative currency strengths are only marking out who is in least-worst shape.

Thanks, MST.

De-leveraging may also be playing a part.

I guess the Japanese "lucked" out because they were still having hangover from the last bubble.

Do you think the export part will be a major issue this time around? They have been setting up factories in other countries (e.g. US, China) now.

Randy:

I thought I was "anti-partisanizing", simply against the "Clinton Surplus/Balanced Budget" bit. 'Taint true as a direct proposition, no matter what size the Deficit Vs. GDP, no matter which side of the partisan divide i fall on. I'm no fan of the Reagan Deficits, either. And OMG the GWBush Deficits.

My big issue is with deficit spending BS. (And here we go again! A little Keynsian stimulus for Christmas! yay! I can pay my heating bill. Maybe.) My second big issue is the off-budget accounting, which allows statements like Kewp's to be made. I'll just "off-budget" a portion of my income and see what the IRS thinks.

And GAO's public debt as a function of GDP chart puts GWB PD at about the same level as WJC PD in 1998/99: http://tinyurl.com/4km4k3
So that makes GWB's deficits OK? I don't think so.

O.T.

Doesn’t pass the sniff test.

Only if that sniffer is on the nose of a Yellow Dog Democrat.

The point of that piece was to not re-elect anyone, regardless of party, who sold out the public by voting for the bailout. To want to forgive the bailout crowd en mass, just because more Democrats than Republicans would be voted out, is simply partisan. If the bailout supporters were voted out, thier replacements would see a good reason to pay more attention to constituents than to lobbyists. It may even put a crack in the two party system.

I'm going to do the unpopular thing and speak up in favor of partisanship:

It appears that many folks, although not necessarily anyone in particular on THIS blog, have decided that "the problem with Washington" is a "lack of bipartisanship".

I could not disagree more.

The whole point of having more than one party is that the parties are there to represent different views. If they always agree we might as well cancel democracy and elect the President as the Kaiser of the United Reich.

Those who know me know where I'm going with this: The problem is not partisanship or lack of bipartisanship. The problem is the serious case of "bipolar government disorder" (yes, this is a pun on a well known psychological condition) which stems from political power always hovering around an unstable 50% mark.

The solution is to abandon our dysfunctional election system and create a proper election system with true proportional representation and support for >2 parties.

As a side note: When Republicans call for "bipartisanship", what they really mean is, "god damn it, do what the president says, he is the commander in chief and The Decider (TM)".

Thank god for partisanship. Without it we would be a dictatorship long ago.

You have a point.

If we had strict partisanship, no Republican would have voted for the bailout (nor would W had proposed it) and no Democrat would have voted to give W the power to take us to war.

Hear! Hear! for partisanship.

Bipartisanship leads to things actually getting done in Washington. God Forfend! My point above is that *facts* are non-partisan.

As a side note: When Republicans call for “bipartisanship”, what they really mean is, “god damn it, do what the president says, he is the commander in chief and The Decider (TM)”.

And vice versa. Please note that the first vote on the bailout ws "Republican Obstructionism (TM)" [and lets have an "Oo-rah!" for Republican Obstructionism then] even though 30% of the no votes were Democrats, and a Democrat Victory against those nasty Repubs, even though 30% of the votes came from that side. It's only bipartisan if you agree with Nancy Pelosi, and then only if they lose, otherwise it's a great moral victory for Dems.

Double standards are the only thing consistent about Washington.

oops: Add words

...and [the second vote] a Democrat Victory against ...

There are many multi-party fans in US. The other side is always greener and so is the multi party system.
I have actually been in other countries and seen the effects of both the systems.
Both the systems suck big time. Its just that the multi party system sucks more. Ideology pushing at the expense of common goal is more powerful in multi party systems.Multi-party systems are more perfect but notoriosly slow.developed and old nations would be better candidates, not young or growing countries.

Republics (since that's what they really are) are godawful messy, but not as messy as true democracies; those can get really guillotine awful.

Republics where the rights of the minority is enshrined in the fundamental way of doing business are very rare (like one example, maybe? Two?). In this case a relatively small group can block (mostly) things from getting done, which is what most of the Constitution is about.

In most multi-party systems, the mini-parties form coalitions to actually accomplish their goals (necessarily majority sized). How is this different from the US? You have a Center-right party that has subdivisions that are for a strong military, reduced (Hah!) spending, free-enterprise, traditional values, etc. We have a Center-left party that has elements of progessive values, union support, and redistributionist economics, etc. Think of all the talk about the various "Wings" and "Lobbies" of the parties. All are represented.

Paliamentary mini-parties' primary goals are to get their slice of the pie made bigger than someone else's. How is that different from lobbying? You've just made the lobbies into political parties. Bad idea.

snmr:

>> I have actually been in other countries and seen the effects of both the systems.

So have I.

>>Both the systems suck big time. Its just that the multi party system sucks more

I disagree.

>>Ideology pushing at the expense of common goal is more powerful in multi party systems.

Your words are abstract, I see no evidence that this is true. On the contrary, if you have multiple parties, it is much simpler to get a majority of votes for any given law, because each party can afford to have its own ideology and a nuanced view about each law proposal. Multiple parties much more often ensure that there is a solid plurality behind any given law, or against it, for that matter. This is much more democratic, because the majority rules on a case by case basis.

>>Multi-party systems are more perfect but notoriosly slow.developed

Apart from the self-contradiction, someone will have to explain what this sentence means.

MST:

>>In most multi-party systems, the mini-parties form coalitions to actually accomplish their goals (necessarily majority sized). How is this different from the US?

It is different because the coalition forms on a law-by-law voting basis. Coalitions are not only about capturing or controlling the executive branch, they are about passing laws on a case-by-case basis. As I said above, this fact ensures that much more often a solid majority of the people are behind each law passed.

Justme:

1) Please give concrete examples (name a country) of these coruscating coalescences of mini-parties creating voting majorities on vote-by-vote bases.
2) Since most of these multi-party states are parlimentarian, ruling coalitions must be created or governments fall. Please give your counter-examples of Prime Ministers who have a constantly changing coalition under them, and if the PM opposes the (supposedly popularly mandated) law, how does he avoid a vote of no confidence?

Your idealization of the motives of these parties is unrealistic. There will always be quid pro quo: you vote for my boondoggle, I'll vote for yours, which knock your ideologically pure mini-parties right back into politics as usual.

"Ideologically pure" is frightening in and of itself. Ideological pure parties account for several hundred millions of their fellow citizens dead in the last 100 years. And those purists were all small minority parties -- until they killed off the opposition or terrorized them into submission.

Give me big, corrupt, raucous, obnoxious do-nothing bloviators. Save us from the Pure of Heart!

There is no perfect political system. Humanity is destined to sway from one system to another as history unfolds, with or without bloodshed.

MST:

1) if I do, will you then concede, or are you just making busywork for me? If you are willing to concede once I come up with the examples, I will go and do the work. I won't sit down with you without preconditions ;-).

2) I did not make a claim about Prime Ministers ruling continuously through multiple consecutive different coalitions. You served up that red herring all by yourself.

What must be understood is that it is perfectly possible for executive coalition member parties to vote against each other on specific laws. This does not cause the executive branch to fail. It does only if the Prime Minister explicitly states that (s)he will resign unless the law passes, and acts accordingly. Or if there is a vote of non-confidence against him. This is a great way of getting rid of dangerous people in the executive branch.

Multi-party systems are more perfect ( representation of democracy) but notoriosly slow. The more closer you go towards dictatorship, the faster the decision making ( for good or bad). ofcourse, i am not advocating dictatorship...just making my point. The more you go the other way, the slower but more democratic. There is a fine balance though and we can't just theorize our way out of it. The balance can be found mostly by observation rather than black and white theories. If you look at the efficiency of democratic system versus the risk they pose to democracy itself , i personally feel that two party system is much more efficient ( relatively)

I also take exception to the word mini-parties. Parties can be big or can be small. It is not uncommon for parties to have anywhere from 5 to 35 % of the popular vote in many western democracies.

My conclusion is based on observation and data. you guys seem to be more knowledgeable about the inner workings though.
If you have some evidence which proves otherwise, i will be more than happy to hear that.
These things are not new and history is enough proof on which system is more efficient and which is not.

snmr,

You are entitled to your opinion, but I have seen no evidence that multi-party democracies are slow.

Counterexample: Did not just France, Germany, Ireland, even England, and several others put together their financial rescue plans at record speed, and much faster than Washington.

Washington often described as "a gridlock". So which is it, a bipartisan gridlock or a lean mean decision machine?

I propose strong regulation of governments.

In this regard, I guess we at least have a good constitutional framework.

Argentina is going to nationalize pension funds. Is this what you want? Democracy can be as dangerous as exotic derivatives if the tyranny of the majority is not well regulated.

snmr,

our posts crossed again. I see no data. You have probably observed plenty, but as you say yourself, it is indeed very useful to have a wider knowledge about how many other western democracies function internally.

At some point, Rome was an incredibly powerful democratic republic. And I will bet that any number of romans would agree that they had the best and most efficient democratic republic possible How could it not be -- they were the rulers of the world!! They simply had to be the best, right?

But history shows what happened soon thereafter,

But history shows what happened soon thereafter,

Exactly. Any system eventually fail. This has absolutely nothing to do with the merits of the system. It has everything to do with time and events.

Peter P,

We actually agree on something today:

Strong constitutions and GOOD constitutions are of the essence. The US has a flawed constitution and election system. Many countries have better systems, We should learn.

>>Argentina is going to nationalize pension funds. Is this what you want?

Oops. Maybe I spoke too soon. There you go again baiting with some irrelevant prattle. What is your point here, exactly? That multi-party systems are more likely to nationalize than 2-party systems? Whatever the reason, it was just a red herring.

PS: Our 2-party system just "nationalized" the big banks, at least according to some people.
They also did not privatize social security, so no need to re-nationalize that, for what it's worth (sarcasm off).

Peter P says:

>>I propose strong regulation of governments.

Then he says:

>>Any system eventually fail. This has absolutely nothing to do with the merits of the system.

Uh, logic contradiction alert, anyone?

Strong constitutions and GOOD constitutions are of the essence. The US has a flawed constitution and election system. Many countries have better systems, We should learn.

Which country has a better constitution than the US? I agree we need to more adherence to the constitution.

The "progressive" era is a dark age though.

Does the inherent structure cause the elected members in multi party systems to be more pandering to thier constituents than focusing on something big for the country ?
India and other former british colonies have this problem so i am just curious ?
may be justme can enlighten me here.
What motivation does a mini-party have in driving and creating something useful for the nation beyond just getting re-elected ?
India has failed so many times in pushing for major "national" reforms when small parties with no national brand (so nothing to lose) have time and again put obstacles.
The more parties in key decision making, the less recognition they will eventually have and hence less motivation for the stuff thats beyond pandering to thier local masses
No wonder, europe is leaning towards socialism.
May be two or more Ceo's for a company might be good idea too ;-)

Better constitutions and election systems: Japan, Germany, France, Denmark. Norway, Sweden, Finland, Austria, Italy, Switzerland, there is a long list.

I'll prefetch the next question:

Next up: "How come they are not as big and great and powerful as us?"

Answer: Duh, just because we are the biggest and strongest doesn't mean we are perfect, nor that we need not improve. This is a false argument.

Hi Bap, yeah, I figured I could count on you for a thougtful argument :-).

Henry Waxman: You were perhaps the leading proponent of deregulation of our financial markets, certainly you were the most influential voice for dergulation. You have been a staunch advocate for letting markets regulate themselves. Let me give you a few of your past statements:

In 1994, you testified at a Congressional hearing on regulation of financial derivatives. You said there was nothing involved with federal regulations that make it superior to market regulations.

In 1997, you said there was no need for government regulation of "off-exchange" transactions.

In 2002, when the collapse of Enron led to the renewd Congressional efforts to regulate derivatives, you wrote the Senate, "We do not believe a public policy case exists to justify government intervention"
And earlier this year, you wrote in the Financial Times, bank loan officers, in my experience, know far more about the risks and working of their counterparties than do bank regulators.

And my question for you is simple: Were you wrong?

Alan Greenspan: Partially. Let's separate these problems into their component parts. I took a very strong position on the issue of derivatives and the efficacy of what they were doing for the economy as a whole...

Waxman: So, you don't think you were wrong in not wanting to regulate derivatives?

Greenspan: Well, it depends which derivatives we're talking about. Credit default swaps have serious problems associated with them...

Waxman: Let me interrupt you because we do have a limited amount of time.
...

Waxman: Dr. Greenspan, Paul Krugman the Princeton Professor or Economics who just won a Nobel Prize wrote a column in 2006 as the subprime mortgage crisis started to emerge. He said, "If anyone is to blame for the current situation, it is Mr. Greenspan who poo-pooed warnings about an emerging bubble and did nothing to crack down on irresponsible lending".

He obviously believes that you deserve some of the blame for our current conditions. Do you have any personal responsibility for these financial crises.

Greenspan: Let me give you a little history, chairman. There's been a considerable amount of discussion about my views on the subprime market in the year 2000. And indeed, one of our most distinguished governors at the time, Governor Gramlich, who regrettably is deceased but who was unquestionably one of the best governors I've had to deal with, came to my office and said he was having difficulty with the problem of what turned out to be a fairly major problem in predatory lending...

Waxman: He urged you to move with the powers that you had as chairman of the Fed as both the Treasury Department and HUD suggested that you put in place regulations that would curb these emerging abuses in subprime lending, but you didn't listen to the Treasury Department or Mr. Gramlich.

Do you think that was a mistake on your part?

Greenspan: Well, I question the facts of that. He and I had a conversation. I said to him I have my doubts whether that would be successful. But to understand the process by which decisions are made at the Fed it's important to understand...

Waxman: Dr. Greenspan, I'm going to interrupt you. The question I have for you is... You had an ideology ... You had the authority to prevent the lending practices that led to the subprime mortgage crisis, you were advised to do so by many others, and now our whole economy is paying the price. Do you feel that your ideology pushed you to make decisions that you wished you had not made.

Greenspan: Well, remember what an ideology is. It's a conceptual framwork for the way people deal with reality. Everyone has one. To exist, you need an ideology. The question is whether it is accurate or not. And what I'm saying to you is that I found a flaw - I don't know how significant or permanent it is - but I've been very distressed by that fact. But if I may, can I just answer the previous question?

Waxman: You found a flaw in the reality...

Greenspan: I found a flaw in the model that I perceived is the critical functioning structure that defines how the world works.

Waxman: In other words you found that your view of the world, your ideology, was not right. It was not working.

Greenspan: That's precisely the reason I was shocked because I was going for forty years or more with very considerable evidence that it was working exceptionally well.

But, just let me finish if I may...

Waxman: Well, the problem is that time is already expired.

So Greenspan had a faulty idelology. Who could have guessed?

Its comforting to know that Alan Greenspan is apparently less intelligent re: financial matters than a bunch of random IT dorks running housing blogs.

I don't really feel that Greenspan was to blame. If you want to argue for not having a central bank at all, then you might have a good point. But if you DO have a central bank that controls interest rates, then Greenspans model actually wasn't that ridiculous.

Note that low interest rates DID NOT cause the problem we're in. The problem was caused by fraud on many levels of our financial system. The banks thought they found a way to game the system, and they did, until they sucked all the marrow out of America. Now that the bone is dry, we're experiencing the after affects.

His biggest mistake was underestimating the animal nature of man. Which, really, we're all guilty of. Except Peter P of course.

It will be interesting to see how this affects research and academia in general. There will be less endowment income to pay for the programs and less to reinvest.

The UC already froze wages for the year.

Beyond that Uni endowments are notoriously conservative. They are also absolutely enormous these days. Stanford and Princeton are basically free if you come from a needy family.