When I despair at the shallow ranting on TV (I don’t have one, but it is always on at my dad’s), I am reassured by the quality of thinking going on in many of our think tanks here in Washington, D.C. and elsewhere. An outstanding example was the all-morning discussion of President Dwight D Eisenhower’s farewell address Thursday at the CATO Institute. Ike’s granddaughter, Susan Eisenhower, introduced the two panels of experts on what Ike called the “military-industrial complex.” A lecture by any one of them would have been worth the drive into town. But here were all ten of them together: Andrew Bacevich, Charles Dunlap Jr., Lawrence Korb, Lawrence Wilkerson, Chris Preble (the organizer), Eugene Gholz, John C. Hulsman, Richard Betts and Ted Galen Carpenter. What a group. You can see the entire program here. (more)
The debate over whether to build a mosque at Ground Zero grinds on. By now almost everyone knows it would be a YMCA/JCC-like neighborhood Islamic community center not even visible from Ground Zero. The Washington Post recently published an aerial picture of the neighborhood to make that clear and provided an interactive walk around the area on its website. More importantly, America’s commitment to private property rights and the rule of law (not to mention religious freedom) have been clearly upheld by President Obama, New York’s Governor Patterson, New York City’s Mayor Bloomberg, and the city’s Landmarks Preservation Commission. Score one for what we stand for and what has helped to make us great. So the debate has moved on. According to the sometimes clear voice of Charles Krauthammer, “No one disputes the right to build; the whole debate is about the propriety, the decency of doing so.” (more)
Should an Islamic community center and mosque be built a few blocks from the site of the collapsed World Trade Center in New York? The American Center for Law and Justice (ACLJ) doesn’t think so. In a lawsuit brought against the New York Landmarks Preservation Commission last week, that the Commission did not adhere to proper procedure when it refused to designate the property on which the facility would be built an historic landmark. The basis for requesting historic landmark status was that some of the debris from the World Trade Center fell on it. The Commission’s unanimous ruling preserves the right of the owners of the private property to permit Feisal Abdul Rauf and his wife, Daisy Khan, who Time magazine characterize as “modernists and moderates who openly condemn the death cult of al-Qaeda and its adherents” to proceed with their intention to build the Cordoba House Islamic Cultural Center there. Score one for private property. (more)
It was interesting being in Kenya this past week while the World Cup football (soccer) matches were being played near-by in South Africa. When Kenyan’s interrupted their viewing of a match to converse with me and learned that I was an American they inevitably wanted to know how I thought President Obama was doing. I hated telling them. The current World Cup in South Africa, however, made viewing Clint Eastwood’s “Invictus” on the plane on the way home even more moving than it would have been anyway. The movie dramatizes South Africa’s first post apartheid president, Nelson Mandela’s, decision to save and embrace South Africa’s national soccer team, “Springboks,” so loved by white South African’s and thus hated by black South Africans, as an element of his program of national reconciliation. (more)
My heart goes out to the poor people of Kyrgyzstan. They seem to be sliding into civil war. The current government of this small, poor central Asian country of 5 million people, in power for only two months, seems unable to contain the ethnic violence in the south near the Uzbek boarder and is appealing for outside help. Nestled between Kazakhstan to the north, China and Uzbekistan to the east and west and Tajikistan to the south (and Afghanistan just beyond), Kyrgyzstan provides a example of how it might look easy for the U.S. to help a friend—they have allowed us to set up an airbase there that we use for supplying our troops in Afghanistan to the south. The Kyrgyz Army is weak and its police corrupt. The new government just drove out a corrupt President, Kurmanbek_Bakiyev, who had come to power in March 2005 in the bloodless Tulip Revolution that replace Askar Akaev, Kyrgyzstan’s first President since its independence from the Soviet Union in August 1991. They need help to survive. (more)
I have had to remind myself of late that there is much to be proud of as an American. And I have not been prouder for a long time than I was Tuesday night listening to this year’s recipients of the Merage Foundation for the American Dream’s National Leadership Awards. Paul Merage family’s foundation is dedicated to “Helping Immigrants Join Mainstream America.” Mr. Merage is himself an immigrant from Iran, which he left in 1979 by necessity. But his choice to settle in the United States was his, and the Merage Foundation is one of his ways of expressing thanks for the opportunities that opened up to him here and to give something back to help keep America the dynamic, innovative home to immigrants that has been such an important component of our success as a nation. (more)
Greece suffers from unsustainable public-sector debt, low productivity, and an overall uncompetitive economy. In 2009, the government’s fiscal deficit was 13.6 percent of Greece’s gross domestic product (GDP) and its outstanding debt stood at 115 percent of its GDP. Lenders were losing confidence in Greece’s ability to repay them. Before the loan agreement with the International Monetary Fund (IMF) and the EU announced on May 2, they were demanding an almost 10 percentage points premium over lending rates to Germany, which worsened Greece’s deficit. Even with the large corrective measures Greece has agreed to undertake, its debt is projected to increase to 149 percent of GDP in 2012 before beginning to shrink in 2014. (more)
Has Goldman Sachs done something wrong? Do their synthetic collateralized debt obligations pose a systemic risk? If so, what should we do about it? (more)
Our behavior is profoundly influenced by the incentives we face. Money is a very important motivator but money is not everything. Our behavior is also influenced by prestige, power, benevolence, and all the feel good stuff. All of these help determine the incentives we face to work hard for our own benefit and for the good of man kind. Our cultural and moral values are also important more directly for the quality of our lives and for the success of any economic system—capitalism or socialism—by supporting or failing to support voluntary compliance with the needs of that system. They provide the lubricant that helps the economic system function smoothly. (more)
We have just experienced the consequences of excessive risk taking by financial enterprises, real estate speculators, and overstretched homeowners fueled by the expectation that taxpayers would cover their losses if risky bets failed. Washington’s response to the financial crisis has confirmed these expectations and is thus compounding the problem for the future. Recovery of the U.S. economy and of the financial sector that finances it requires stabilizing the rules of the game and restoring market discipline of risk taking. Washington must give up the conceit that it can reliably micromanage socially desirable outcomes successfully. Regulatory rules must return the cost and reward of risk taking from the taxpayer to the risk taker. The moral hazard of financial risk takers taking the profits and tax payers bailing them out when their bets fail has seriously corrupted our financial system. It will not be easy to put that genie back in the bottle, but it can be done. (more)
As the amount of a debt grows larger, the payment of interest it promises to lenders increases. If it grows faster than the borrower’s income, the burden grows as a share of his or her income. If the burden grows too large, the promise must be broken, leaving those who lent the money holding the bag. As the prospect of default increases, bondholders demand higher interest rates to compensate for the risk. No one knows exactly where the default cliff is and thus when to dump bonds, but everyone knows when you have driven off it. (more)
If AIG, the insurance giant bailed out by the U.S. government, had failed a large number of assets such as mortgage-backed securities would have lost their insurance against losses (called credit default swaps) causing their value in the market to fall. (more)
