Friday, February 14, 2003

Silly Boy

Lt. Gen. Ion Mihai Pacepa, a former chief of Romania's foreign intelligence (defected 1978), has a short essay in the National Review today. The essay describes Joschka Fischer's, Germany's foreign minister, not too distant past. These revelations are not news and I imagine the essay is there because the Nat Review has been on a tear over France and Germany. The essay's content underscores my earlier point about socialism becoming the driving ideology in Europe (particularly Western Europe).
Carlos [ aka Carlos the Jackal, the terrorist sitting in a French prison, who married his lawyer, who now runs around the world defending other terrorists ] also testified that the weapons used for the OPEC operation had been kept in an apartment in Frankfurt/Main, where Klein was then living with two other "red revolutionaries" of those days, Daniel Cohn-Bendit and Joschka Fischer.

After Carlos was arrested by the DST, German journalist Bettina Roehl (daughter of the late Ulrike Meinhof, co-leader of the terrorist Baader-Meinhof organization) revealed that Fischer did indeed belong to a Frankfurt/Main terrorist group during the 1970s. She also provided pictures showing a helmeted Fischer beating a German police officer during an April 7, 1973 [ he was about 25 years old at the time ], violent demonstration in Frankfurt/Main. The pictures show Fischer fighting side by side with Klein, Carlos's deputy in the 1975 attack on the OPEC headquarters in Vienna. In 2002, after these photographs had been authenticated by the German daily Frankfurter Allgemeine Zeitung, Fischer publicly apologized to the beaten police officer. Bettina Roehl also disclosed that Fischer had been the main advocate of using petrol bombs in a 1976 demonstration in which a policeman almost died of terrible burns. This information was also vehemently denied by the German foreign minister.

He was 54 years old when he apologized for beating a police officer after he had been found out.
A 1997 semi-official biography of Joschka Fischer, by Sibylle Krause-Burger, indirectly confirms that Fischer was also involved in hurling stones at West German authorities. These were not spontaneous demonstrations — they were all financed by the Soviet bloc foreign-intelligence community, including my own DIE when I was at its helm. Krause-Burger's book describes how, in a public debate held in 1974 with the Young Socialist functionary Kartsen Voight, Fischer defended throwing stones at the "representatives of the system" as being a legitimate defense against the tyranny of the (West German) government. It is significant that Voight is now responsible for relations with the U.S. in Fischer's ministry of foreign affairs.
My point here is not to draw attention to what a horrible person Joschka Fisher was at 25, and in all likelihood still an evil human being at 55, but to illustrate two points. First, that his presence at the top of power in Germany is more evidence of their drift to socialism. Second, there were members of left-wing peace-groups, unions, what-have-you, who were directly controlled by Soviet intelligence (spies) and there were even more who through their membership and sympathy (so-called "useful idiots") aided and abetted the foreign policy goals of the Soviet Union (a country that deserves far more scorn than Germany). Enjoy the peace protests tomorrow.

A Penny For Your Thoughts

A Penny? Hell, give this guy a quarter. Mr Silber has an excellent essay on US foreign aid (Afganistan and others).

Mmm, Lamb Chops

Dolly the sheep, first cloned mammal, dies.


I just caught this headline... JAPANESE CITIZENS TOLD BY TOKYO TO LEAVE IRAQ. All the Japanese tourists I've seen travel in mass aboard buses, such a bus cruising from Basra to Baghdad will make a very tempting target. Its probably good advice.

Start Your Engines

According to the Daily News the place to meet single women in NYC is on the upper East Side between 89th and 94th Sts. and 1st and 3rd Avenues. You got that, ON THE UPPER EAST SIDE BETWEEN 89th AND 94th STREETS AND 1st AND THIRD AVENUES. This is their habitat. The men live someplace else, specifically the East Village between 9th and 14th Sts., also between 1st and 3rd Avenues. So if you are not so much interested in meeting a nice guy or gal, but would like to meet any guy or gal, you have your marching orders.

Happy Valentines.

Sony With Bombs

Japan announces it WILL kick your ass if you threaten them. The last time this happened was Dec 7 1941. Didn't end well for anyone, but you gotta do what you gotta do.

Thursday, February 13, 2003

Smart Guy

Smart guy Collin May, at Innocents Abroad, has an excellent (and long) essay on France and Germany. I would like to only add a small critique. Collin characterizes Europe's values as driven by peace and human rights, and later refers to this as a humanitarian ideology.
As the old political units of Europe were declining, the apolitical goal of pan-European peace and human rights was gaining steam.

It accuses the United States of seeing the world only through American lenses, and yet Europe, with France and Germany in the lead, tends to see nothing but the bland and flat land which is its humanitarian ideology.
While the chatter about peace is quite deafening today, it has not always been the case and when the current crop of troubles eases, hopefully in a couple of years, the chatter will cease. There are plenty of examples that demonstrate Europe's lack of commitment to human-rights: it's one-sided approach to the Israeli-Palestinian conflict, ambivalence to atrocities in their own backyard (former Yugoslavia), massacres in Rwanda, oppression in North Korea, China, Iran, Syria, Libya, Nigeria, Congo, etc.. Lack of leadership or accomplishment in basically every major humanitarian disaster.

It is impossible to be all things to all people. Impossible to right every wrong. But where are the accomplishments of Europe's "humanitarian" ideology? The core European ideology is not "humanitarian", it is the expansion of socialism and statism. During the cold-war socialism, while popular in Europe (especially in comparison to the US), was kept back by the communist horror next door. The most ambitious goals of the socialist movement could never be realized in western Europe while they were dependent on the US for their protection and while the manifestation of communism was a few miles away. Today that horror has largely subsided, and the contrast is no longer there to shine a hard light on socialism's failure, for now. Also one of the key tenets of socialism is the transcendence of nationality, remember the socialists had high hopes to stop WW1 by uniting unions to oppose war. The socialism thesis fits well with Collin's observations about the lack of national pride.

Baby You Can't Drive My Car

Autosales were off 7.5% in January, but there is a 6 month waiting list for the new Volvo XC90 SUV.

Obviously, 7.5% of car buyers are waiting for their Volvo.

Janus from Cali

And I quote from Stan at Overspill
The top Democrat on the House Intelligence Committee has told her daughter to stay off the New York subways.

Of course these fears are very unwarranted. After all, according to Lisa, code Orange is just something the administration does when "presidential approval ratings sag".
Thank you gentlemen.

Before The Coffee

The obligatory dismal science quote... from Ronald Coase
Economics, over the years, has become more and more abstract and divorced from events in the real world. Economists, by and large, do not study the workings of the actual economic system. They theorize about it. As Ely Devons, an English economist, once said at a meeting, "If economists wished to study the horse, they wouldn't go and look at horses. They'd sit in their studies and say to themselves 'What would I do if I were a horse?'".

Wednesday, February 12, 2003

Osama Who?

The other day Mr Reynolds was pontificating about the reason Feds took a plea from Enaam M. Arnaout, the head of a muslim "charity", for sending money to terror groups. Yesterday, UPI reported that the FBI has a list of 20 wealthy donors to al Qaida.
The handwritten list -- referred to within al Qaida as "The Golden Chain" -- details 20 wealthy donors to al Qaida followed by the specific recipient of the funding. Osama bin Laden's name appears next to seven of the entries, including at least one donation made by the "bin Laden brothers," according to the court document.
The list was captured in Sarajevo. The list includes Adel Betterjee who is named in a law-suit filed by families of Sept 11 victims, and recently joined by families of Bali bombimg families.
One lawyer associated with Arnaout's case said that despite Batterjee being a fairly famous businessman, he had repeatedly failed to locate him.

"This guy is considered a famous figure in Jeddah," the lawyer said. "For such a captain of industry, I find it strange that in a year of trying I haven't been able to find him once."
And of course, this is all a big misunderstanding.
Through his attorney, Arnaout continues to deny ever having participated in al Qaida activities, although prosecutors contend they will prove the connection when Arnaout is sentenced. No hearing on sentencing has been set.

Quick Quick

Quick Quick, on CNBC there is a woman to the left of Greenspan that keeps dropping her head as she falls asleep. Come on Alan, crack a joke you are loosing her.

Late To The Party

I may be late to this party, but I had a thought this morning. This happens so infrequently that I am overflowing with pride and must share. Here is an idiot's plan to transition out of social security.

Give everybody the young, middle aged and old the option to opt out of the social security system. People who choose to remain under social security will receive their defined benefits. People can opt out in different ways. I have partioned the options by age group, based on who I think will benefit from the different options, but there is no reason to limit enrollment based on age.

For the young
Can opt out 100% and get to keep virtually all of the money taken by the government in the name of Social Security (currently the average worker pays 17% of their salary into Social Security).
For the middle aged
1. People can opt out 100% and get to keep virtually all of the money taken plus extra credit for the relinquishing claims to Social Security based on their accumulated benefits.
2. People can opt out partially, keeping their accrued Social Security benefits but not adding to them, while lowering their Social Security deductions.
For the older crowd
Keeping their Social Security benefits as is.
The goal here is to transition everybody off of Social Security, without disturbing the benefits currently being paid to seniors. More than 57% of people currently think Social Security is heading for big trouble. So given the chance to exit and keep a greater portion of that 17% income currently being confiscated, what do you think people will do? I know what I would do.

Greenspan redux

Did not have time yesterday to talk about Greenspan's testimony so here's a summary one day later. Regarding current economic state he repeated the same stuff he has been saying for years: productivity of US economy is impressive. Current political tensions have an impact on measurements and therefore make it more difficult to assess current economic state. Some notable positives...
• January employment numbers were encouraging.
• Spreads between corporate debt and gov't debt have narrowed, reflecting reduced risk of corporate default.
• Despite weaker economy, pay levels have held up better than in the past.

He attributed the decent performance of the US economy on its "structural flexibility". The flexibility is a result of liberlized global trade, deregulation of energy, transportation, communication and financial services, and US workers' embrace of technology. Economies with freedom (structural flexibility) are superior to planned economies (duh). Here's a quote
adjustments being automatic and not having to rest on the initiatives of policymakers, which often come too late or are based on highly uncertain forecasts.
Taxation and government spending influences long term potential of the economy (duh again).

The bulk of Greenspan's testimony was reserved for his opinion on what is important for Congress to focus on.

Today 2/3 of budget goes to entitlement programs (e.g. Social Security and Medicare), that is up from 1/3 of budget in the 1960's. Discretionary spending has fallen to 1/3 of budget (from 2/3 in the 1960's). Almost all the drop in discretionary spending has come at the expense of a reduction in military spending.

The Congressional Budget Office currently uses a cash accounting system which does a good job of measuring current government spending against national savings. But the current regimen does not do a good job of capturing the government's future commitments (like entitlement programs, Medicare and Social Security). This flaw in the government's accounting allows the government to largely ignore future liabilities. For example, Medicare (a government subsidy) is virtually an open-ended outlay by the government. There is no limit to how much money the government will spend on Medicare.

The government needs an accrual accounting system, that takes into account government obligations and deffered assets (unrealized taxes). The accrual accounting system will better reflect future government spending requirements. We are currently in a demographic lull, the baby-boomers are not yet retiring. This lull is an opportunity to tackle the problem of entitlement programs before they become overwhelming. Short of productivity increases greater than those we have recently experienced or a major influx of immigrants, in ten years we will have a problem. He quotes Bush: "The longer the delay in enacting reforms, the greater the danger, and the more drastic the remedies will be."

He points out that higher taxes slow growth (duh). And while tax cuts are limited by the need for the federal government to fund basic services (e.g., national defense), there is no such limits to contain spending. Government spending is easy to start and hard to stop, since each government outlay develops a constituency (duh). The pre-Sept 11 military spending (as a portion of GDP) had been the lowest since the start of WW2. Even if Sept 11 never happened it is unlikely more cuts could have been made to military spending.

He also recommended using the Dept of Labor new chained CPI over the current CPI as a measure of inflation.

During the q&a portion of his testimony he repeated his support for ending dividend taxation, it would increase the economy's "structural flexibility". He has always been in favor of eliminating all taxation on capital (particularly the capital gains tax). So I was a bit surprised to read in this morning's WSJ the headline "Greenspan Is Tepid on Tax Cuts, Calls Stimulus Plan Premature". Did the reporter read the testimony? Did they understand the questions and answers? I saw Greenspan trying to focus Congress on
1. dealing with the deficit before it gets out of hand (by using accrual accounting and reinstituting recently expired PAYGO rules),
2. dealing with the entitlment programs that are growing out of control.
3. less government spending and lower taxes is ideal.

No where in his testimony or in the Q&A did he say lower taxes and eliminating the taxation of dividends is a bad idea. In fact he said several times that lower taxes are better for the economy, and that long-term, rationalization, simplification of the tax system is a preferable stimulus to more "traditional" methods (e.g. rebates, welfare payments, government jobs programs).

Tuesday, February 11, 2003

Please, Get A Grip

Greenspan's testimony to congress begins. Here is his testimony, (full report). First impressions: he is more cautious, but pretty bullish, geopolitical risks still need to play out. Still reading...

Monday, February 10, 2003

Go West

Go West, but not too far west. Moody's lowered the state of Cali's bond rating from A1 to A2 (next stop A3, B1, etc).
The downgrade occurred a week after California's two top finance officers met with Moody's and Standard & Poor's in New York to state their case for why the state's credit shouldn't be cut, citing Governor Gray Davis's plan for closing the gap. Treasurer Philip Angelides said after the meetings that the market had "factored in'' the possibility of a Moody's cut.

"There is still risk,'' such as delays in passing a budget that may mean "the bonds will get lower outlooks from the ratings companies'' in coming months, said Stephen Galiani, who helps oversee more than $11 billion of municipal bonds and notes at Wells Capital Management in San Francisco. California's bond prices are "going to get cheaper'' relative to top-rated munis.
Cali is in the hole for $34.6 billion. All the states spending your money, together, have amassed a deficit of $94 billion this year. Other states' ratings may also be cut; Connecticut was also mentioned.

California currently has $21.9 billion in general obligation debt and is going to sell $900 million on Thursday. Are they going to raise taxes or lower services? Spur emigration or spur growth?