National Security

Frederick W. Kagan suggests that it should be the top priority in voters' minds in The WSJ.

That's a difficult thing to do when you're worried about putting food on the table. I don't see Mexico invading us any time soon.

The W - Westwood

I don't normally review hotels, but I had to make an exception for this one.

I've stayed at many a hotel. I've stayed at other Ws. I've never experienced anything quite like the W in Westwood. All Ws have the wannabe rave/nightclub thing going on, but this was extreme. I sat by the pool eating my cheeseburger and sweet potato fries (to the horror of the wannabe actresses/models/porn stars nearby) and just watched the slow roll of hipsters, yupsters, gansters, and "My new work just needs to be seen because I'm 53, but I look like I'm 27 (unless you look too closely - which I didn't) and please somebody rich take me home tonight" types walk by with their enormous and overpriced alcoholic beverages while I waited for my penthouse suite to be prepared.

And by penthouse suite, I mean the elevator button I pressed was "PH". Apparently platinum status means something at the W (unlike the Westin, which disturbs me a little).

The people watching was definitely entertaining, but what bumped the W up to four stars was the suite I stayed in. Kitchen, dining room, two bedrooms (the master is larger than my master) and at last count four giant plasmas. AND the decor. My interior design sister would have been in contemporary heaven. It was that sweet. I only wish my wife had been there to enjoy the mirror above the bed. Hi honey!

Farcical

Going through airport security two to three times a week has caused me to lessen my appreciation for the TSA. From The Atlantic: I'm going to start carrying my PLO, Islamic Jihad, Hezbollah flags through airport security. I could probably borrow them from Obama.

“The whole system is designed to catch stupid terrorists,” Schnei­er told me. A smart terrorist, he says, won’t try to bring a knife aboard a plane, as I had been doing; he’ll make his own, in the airplane bathroom. Schnei­er told me the recipe: “Get some steel epoxy glue at a hardware store. It comes in two tubes, one with steel dust and then a hardener. You make the mold by folding a piece of cardboard in two, and then you mix the two tubes together. You can use a metal spoon for the handle. It hardens in 15 minutes.”

Negative 0.3%

Third quarter GDP results from RGE. Consumers aren't spending, but governments are!

Another One

The Economist endorses Obama. Palin continues to be a dealbreaker for many on the center/right.

Fed Funds Rate

I'm going to be travelling most of the day, but I fully expect a 50 point rate cut. The only reason they wouldn't go with a 100 point rate cut is because then what? You're at a Fed Funds rate of .5%. When things get worse, what would you do? Oh, yea, I keep forgetting about that pernicious/blessed printing press. Print, baby, print.

From the WSJ in anticipation of today's 50 point rate cut.

Boom Noodle

My review of Boom Noodle here in Seattle. I went there last night with a good friend that I haven't seen in about six years.

Nicely done BN. The okonomiyaki was very good (although not quite what I'm used to) and the Tokyo ramen was definitely above average (a little too salty and not enough fat). The only disappointment was the omakase (chef's choice) pickle plate. A little stale. I wasn't aware that pickles could even be stale, but they were.

Would I go back? Yes. Would I take my Japanese friends here? No.

For all of my Yelp reviews, go here or click on the link on my sidebar.

Jumping Ship

First The National Review and now The American Conservative. The conservatives' long knives are out. Francis Fukuyama endorses Obama.

Not Very Good

The National Review's Rich Lowry rates McCain's campaign.

Stag-Deflation

I'll admit. I've never heard that word used before. Inflation, yes. Recession, yes. Stagflation, yes. Stag-deflation, no. From our favorite, very pessimistic, but usually right Nouriel Roubini: "The Coming Global Stag-Deflation".

I'm still not sure we're headed for deflation though. How can we be with the $10T debt and everyone promising to lower taxes? Oh, yea, the printing press.

Deflation rocks. As long as you have a job.

Zimbabwe

Make sure you have some time for this one. A fascinating look at Robert Mugabe from The New Yorker.

I recently watched The Last King of Scotland and was struck by the similarities between the current actions of Mugabe and Amin (minus Mugabe's very formal education) in the 70s.

The Return

Of state power and the weakness of multi-national organizations from Stratfor.

In the end, only the hand holding the gun to our heads matters.

Chicken or ...

David Sedaris writes a funny piece in The New Yorker on the undecided voter.

The Carry Trade

A three hour flight means lots of interesting reading. Why the yen is appreciating against all other currencies from Stratfor.

W.P.E.

Mr. Laffer (of Laffer Curve fame) offers his insights into "The End of Prosperity" on the Opinion page of the WSJ.

I still can't believe I voted twice for one of the worst presidents ever. Fool me once... Ouch, I can't even finish it.

Taxes

The candidates only seem to be speaking about income taxes. I thought I'd list a few more taxes and whether they are progressive (rich pay a greater % of their income), regressive (poor pay a greater % of their income), or neutral.

Income tax = progressive
Payroll tax (paid by both individuals and corporations) = neutral to progressive

Property tax = regressive
Sales tax = regressive
Inflation tax = regressive

"One of the greatest mysteries of our time is how the GOP convinced the poor and middle class to vote against their self-interest."

Prop 8 (CA) and Prop 102 (AZ)

Andrew is dead wrong.

The LDS Church supports these constitutional amendments to define marriage as being between a man and a woman because it believes that marriage is not just a word. Marriage is an eternal principle. A principle which modern day prophets have revealed to be strictly between a man and a woman (see The Family: A Proclamation to the World). In our view (and I know there are alternative views - I used to have one of them), defining it as anything else would be mocking God. And that is not something we(I) are prepared to do.

Today's Testimony

From Alan Greenspan. He has some 'splaining to do. Cheap money. Cheap money. Cheap money.

Equality

I've been thinking about equality and inequality lately. The above graph (generated from CIA Factbook data and posted on Wikipedia) represents income disparity by country using the Gini Index from the last 50 years. The fact that income disparity has been rising and that we are on par with China disturbs me. Income begets wealth (usually) and wealth begets wealth which begets sick amounts of wealth forever.

This rising gap between rich and poor is not just a moral issue (although in my mind, this is the more important of the two arguments for greater equality), it's a stability issue. The greater the gap between rich and poor, the less stable a society you have. Now I understand that inequality is an incentive for the poor to work harder to become rich (and they will work exponentially harder than the rich do to stay rich), but if economic mobility is not a reality for the majority of people, which I believe it isn't, then you have a huge French Revolution-like stability problem.

But back to morality. Is it right for the poor, not just in our country, but in the world, to be stuck in this poverty trap? (And it is a trap. I've lived in Brooklyn. I've lived next to the Bronx. I've driven very quickly through terrible parts of Oakland. I've been to places in South Phoenix that I never should have gone to. There is little hope and the likelihood of someone escaping is extremely low. There is no such thing as a level playing field.)

It's not right. It's not just. It's not merciful. It's not charitable.

US$

The rise of the US$ is really interesting. When you think of the awful state of the U.S. economy, the $ should not be rising, but it is, which means currency traders think that the $ is relatively safer than the Euro, the BP, the Yen.

The U.S. sneezes and the world gets a cold. Globalization. Gotta love it.

Air

$50T (as in trillion) spent on air, vapor, trust.

Cornered

Is this going to be another 1984 election or can McCain actually turn this thing around?

"...dumb Populist-in-Chief..." from The Economist! That's saying something.

"Real Responsibilities"

Being a mayor in Wasilla is pretty intense:

Don't Read This

If you want to remain in a good mood today. Bernanke's statement to Congress yesterday.

A 20% increase in unemployment this year. Nice.

Bernanke's life work has been a study of The Great Depression. Let's hope he learned something. More fiscal stimulus is on its way.

And if you're not depressed enough, from Nouriel Roubini:

...need traditional Keynesian spending of $300B to boost private consumption so that an unavoidable 2-yr recession doesn't become a decade long stagnation by hitting Main Street given that the private sector is not spending and the first stimulus was ineffective...

Bretton Woods III

Stratfor looks at the upcoming meeting of the U.S. and Europe in what could be the next Bretton Woods.

Tinny Tin Tin

From the Opinion page of the Wall Street Journal: Conservatives Against Conservatives.

European Vacation

Honey, pack the bags, it's time for a Royale with Cheese.

Contagion

A nice summary of the insanity from CASE.

SF

I come to San Francisco every couple of months just to make sure that the people in my office know that I have not yet been sacked. And to eat at the best sushi restaurant in America. Because I am not here on a regular basis, I sometimes forget what a unique city SF really is, which lasts about five minutes until the protest/parade inevitably rolls past my office window.

Early Exit Poll

"I got a decent sample anyway: half men, half women, half white; a third were over 50, and I'm pretty sure 12% were gay, even if 4% were probably denying it to themselves."

From The Treasury

This month's Treasury Report.

Page 5 shows you which departments are eating up the budget (in descending order Social Security, Defense, Health and Human Services (i.e., Medicare/Medicaid)).

Page 20 makes me physically ill.

Joe The Rich Freaking Plumber

I chose the wrong profession. A plumber makes more than $250K? Are you kidding me?

Great debate. If I was only listening, I would give it to McCain, especially the first 30 minutes. The Senator was a bulldog. Unfortunately this is television. McCain's pallor and grimacing reminded me of Nixon in 1960.

"I am not President Bush." was a great line from McCain.

Energy, education, and judges brought it back into Obama's court. Obama had a better closing.

The one issue that I completely disagree with Obama on is abortion. It's troubling.

Neither choice is perfect. Both pass the intellect test, although Obama has the edge here. Obama clearly wins the temperament test. Judgment. The key issue for me is Palin. Lest he die, lest he die, lest he die. Unacceptable.

The Final Debate - Factcheck.org

Is he really a plumber?

Fed Beige Book

The October Report.

High Lights
- International travellers continue to increase. Yea, Minnesota. It's awesome!
- Kansas City, Chicago, and St. Louis are offering higher incentives on automobile purchases. What? My worthless credit score is actually worthless?
- Kansas City and Chicago are still buying heavy machinery. With what? BBQ and nasty ass pizza?
- Consulting firms experienced reduced demand. Shit.
- Credit conditions are creating a heightened sense of concern about the economy. I need the Fed to tell me this??
- The prices of homes are declining and the supply is increasing. WTF??
- Businesses report difficulty in obtaining credit. How much did generating this report cost exactly? I'd like to undercut them by 50%. I'll have the next report ready by tonight.
- Conditions for energy and mining are positive. Is that why the Exxon guy down the street has three new cars and a boat?
- Higher retail prices are expected over the next few months. Merry Christmas to you too!

The Imperial Presidency

From Cato on how both candidates view extraconstitutional presidential authority and how they will wield The Magic Scepter of Inherent Authority. Where is that Constitution thing again?

"Debating the Debates"

In anticipation of tonight's debate, The Economist walks us briefly through the history of presidential debates.

My favorite line was, "Sarah Palin, meanwhile, avoided difficult questions by asking her own and then answering them."

I expect more of the same. Same questions. Same answers. No real interaction between the candidates.

But I can hope for a bloodbath. Politics is afterall just another form of entertainment.

Power

The Monday meeting between the government and the bankers.

To be a fly on that wall.

Thinking of the power being wielded in that room makes me a little giddy.

May I?

I think I am dreaming CNBC at this point. I've always enjoyed it, but travelling as much as I do gives me many more hours of evening and morning CNBC viewing. Mad Money, Squawk Box, Squawk on the Street, and of course Kudlow and Company. It's required viewing at the Westin these days.

The Treasury unveiled it's latest plan this morning. Click here for the full Treasury memo.

My favorite part is that if a corporation wants to increase its common stock dividend, it must ask the government for permission. Seriously, capitalism is dead.

It's Far From Over

Stratfor's look at Europe's and the U.S.'s current solutions to the financial crisis.

Why

Ever since I became politically conscious (~15 years old on the speech and debate and mock congress teams), I've been a self-described libertarian, realist, free market Republican. Ideologically, it is extremely appealing. Everyone looks out for his or herself, is self-sufficient, rises to his/her level of incompetence, and allows everyone else the same freedom. It's an extremely empowering ideology. All of your success is due to your hard work. Any failure is due to you not wanting to work harder. Having been born and raised in the Southwest, with all of its cowboy independence, it was a natural fit. I voted Republican down the line (with the exception of Bill Clinton in '96 - who was I to turn away from peace and prosperity?).

Last week, I voted for Barack Obama for President (early voting, as I'll be out of state on Election Day).

Up until a month ago, I was going to vote for John McCain. I voted for Senator McCain in the 2000 Republican primary (and how I wish he had been President the past eight years. And for full disclosure, I did not vote for him in the Republican primary this year. I voted for Ron Paul.). However, events over the past four weeks have convinced me that I cannot vote for him again.

First and foremost was his selection of Governor Palin. I wasn't immediately opposed to her because I knew nothing about her. I took a wait and see approach. Well, I've waited and I've seen. In my opinion, she lacks the intellect, the judgment, and the temperament to be a heartbeat away from the Presidency. I won't YouTube you to death, as I'm sure you've seen the interviews and debate (no press conferences though??), but I expect more from my leaders, especially after the past eight years.

McCain's political selection of her reflects poorly on his own judgment. Yes, it made sense politically. He did need to fire up his social conservative base, a base extremely wary of some of his more liberal tendencies (see campaign finance reform and immigration), but his selection of her as his running mate demonstrated that he was not putting 'Country First'. McCain selects Lieberman or Romney and I might not be writing this.

Which brings me to reason number two. The Republican social conservative base. I refuse to be affiliated with a group of people that hates/despises/thinks I am bound for eternal damnation and is pretty vocal about it due to my religion. The Republican base despises The Church of Jesus Christ of Latter-day Saints. I used to ignore it. I will not ignore it any longer.

Reason number three: The Republicans are no longer the party of small government. The romantic allure of Barry Goldwater's Republicanism no longer exists. In today's globalized environment of multi-national corporations and interdependent economies and governments, and as evidenced by the global financial meltdown now occurring, I'm not sure a small government approach is even possible.

Over the past thirty years, Republican administrations have increased the size of government in real dollars and as a percentage of spending year on year more than Democratic administrations have. We have a party that says government has a role to play and then spends pragmatically (relatively speaking) and another party that says government should get out of the way and then does the opposite and drives spending (the size of government) up.

If I don't have my romantic and possibly infeasible option any longer, I'll go with the pragmatic. Senator Obama is no messiah. He will not change our current situation with a wave or clap of his hands. However, I believe Senator Obama has the intellect, the judgment, and the temperament to do what is best for our country. My instincts tell me that he will put pragmatism over dogmatism. Could I be wrong? Absolutely. Only time will tell, but for now, this could be the end of my own personal history (see Francis Fukuyama). Ideology from both the left and right has demonstrated that what ideology is really good at is getting in the way of doing what is right.

Credit

"Part of the reason this crisis occurred is that everyone was living beyond their means – from Wall Street to Washington to even some on Main Street. CEOs got greedy. Politicians spent money they didn't have. Lenders tricked people into buying home they couldn't afford and some folks knew they couldn't afford them and bought them anyway.

We've lived through an era of easy money, in which we were allowed and even encouraged to spend without limits; to borrow instead of save."

For the full text of Obama's speech today, click here.

Plan B

How to save Wall Street AND Main Street (lots and lots of cash).

The G7

And I thought the past two weeks were interesting. What is the G7 going to do this weekend? Coordinated rate cuts down to 0%, insure all deposits, nationalize the banks, revalue all mortgages, suspend all foreclosures, massive public/international works? Or something even more drastic (Central World Bank anyone with a single new currency?)?

Two Years

Can't I just go to sleep and wake up in two years with everything all better? A Global meltdown is at hand. Here's hoping for effective coordination among governments and central banks.

Three-Headed Monster

And what can be done about it. From The Economist.

I bet we see another coordinated rate cut in three weeks (maybe a full 100 basis points from the Fed).

Spending Freeze?

He was just kidding. McCain's mortgage restructuring would put $300B immediately into the hands of shareholders and bank managers (via economist Brad DeLong). Seriously what happened to the John McCain that I knew a year ago? A month ago?

Passion

Donna Brazile - CNN contributor, Democratic superdelegate, and Obama supporter at The New Yorker Festival last weekend.

A Collection

Of thoughts from conservative bloggers on last night's debate.

The writing is on the wall.

Not So Doomy

An Op-Ed from a UCLA professor in the WSJ.

Immigration will save us. I thought I said that a couple of years ago.

CFR Debate

Dr. Doom at the Council on Foreign Relations.

You can watch it here. I'd recommend watching it if you can. The transcript doesn't convey the interplay between the panel very well.

Unprecedented

A coordinated rate cut. Thank you Sweden.

More money, more money, more money. Where's my $500 loaf of gluten-free bread?

Debate v3

- Obama started out weak and unclear. He had to warm up to his talking points. McCain was on point from the get go.

- Point/counterpoint with the Fannie Mae/Obama connection and the deregulation/Bush/McCain connection

- McCain is going to actually buy the loans? Not just the securities? Wow, I never thought I'd hear a Republican talk about nationalizing home ownership. Socialism with a capital S (and probably a good political move - he needs something radical at this point).

- Obama is for a net spending cut (balanced budget or just smaller deficits? Tax Policy Center shows that Obama balances the budget.)

- Health care, entitlements, energy - McCain is going to do all three at once? Really? You're going to take on the third rail of politics at the same time as solving the energy and health care crisis? Now that's ambitious.

- Of course Obama puts entitlements last. He is a Democrat. Also politically smart to prioritize in this way.

- McCain links Obama to Hoover. Now that's a neat trick.

- Brokaw is an excellent moderator. The best of the three so far and heads and shoulders above Iffel.

- Starting to get nasty with the responses to each other. Brokaw is clearly frustrated, but still some semblance of control.

- Obama just talked about his mother's death and health care. Health care is a right. IT IS!!

- Foreign policy - what, no "naivete" tonight Senator McCain?

- Obama - McCain - "Bomb, bomb, bomb Iran" Low blow and effective.

- And the rest...

Again, no gaffes. More nastiness, but that only solidifies positions, (see Sean Hannity's ravings preaching to the right wing choir). I think the 2% of undecideds are waiting for something spectacular and if that something spectacular does not happen, they'll go with what they perceive as either intellect and judgment or experience and judgment.

This election is Obama's to lose and he's doing a very good job at not losing it so far. FactCheck.org is up.

The German Question

From Stratfor. Germany's position on Ukraine/Georgia and Russia. Particularly interesting in light of McCain's and Obama's stances on foreign policy.

Only the Third Inning?

An IMF working paper written in August on recessions, credit crunches, and asset bubbles. Pages 17 through 33 contain the real meat.

Personal Plea

I'm too big to fail.

Senator Kyl

I wrote Senator Kyl twice over the past several weeks (along with Senator McCain and Congressman Jeff Flake). Today I received a reply from him that I'm sure several thousand other Arizonans received as well. The gist of it was:

- Our economy is in shambles
- We had to do something
- We talked to a lot of smart people
- We abandoned our free market principles
- This is the best we could do in the short term
- Let's cross our fingers and hope it works

Today's meltdown indicates to me that not enough of us were crossing our fingers.

FL

Holy Florida Batman! and a Transformed Election.

Talk about one of the worst three week stretches in American political history.

Will Work For Food

From the RGE Monitor: Something we are all concerned about (employment).

We Are All Socialists Now?

Or just socialism for the rich yet again?

I'm proud that my Congressman voted against this travesty.

Choked Up

Modern debates are not won on arguments. They are won on emotion. This was the moment of the debate:



Palin did surprisingly well, meaning expectations were so low that unless she had totally wigged out or said that she was Jesus, she was going to be perceived as having done a good job. Biden won the actual debate (pretty easy as Palin didn't really answer any questions posed to her by Iffel, only those questions written on her note cards, which once in a while corresponded to the question being asked).

FactCheck.org just for kicks.

From the WSJ

More on Moral Hazard

and

Lessons from the last 9 months for investors.

More from Dr. Doom

Coordinated 100 basis points reduction across all central banks globally. And that's just for starters. The man predicted this event two years ago. Maybe more people in Washington should start listening to him.

Deposit Insurance

Haven't our legislators ever heard of moral hazard? Deposit insurance is a terrible idea to begin with. It's not even insurance. It's a guarantee to the banks that they will not be held accountable for "insured" deposits if they engage in risky behavior that causes them to fail (think S&L crisis). Raising the limit to $250K simply means that cash strapped banks will need to put more of their cash into federal hands to meet their reserve requirements, which leads to higher fees from the banks and higher taxes from the government to cover the failures. Talk about these guys not understanding basic economics and only playing to their constituencies. Nanny state indeed.

The FDIC should be dissolved and we should be forced to invest our money with banks the same way we do with stocks, bonds, etc. Risk vs. return.

And yes, I realize that I suggested that moving money to insured and nearly insured (Treasuries) short to medium term investments would be a good idea. I don't make the rules, but I do play by them. Call me an idealistic pragmatist.

Politics and the Economy

"Political Nature of the Economic Crisis" from Stratfor.

As usual, excellent.

One Hit Wonder?

Daily podcast from Cato

I suspect it was. Some sort of debt funded bail-out is inevitable.