September 2008

You are browsing the site archives for September 2008.

So, the bailout bill has failed.

Cool. Scary too, but cool. I hope it stays this way.

As word got out that the bill was failing, the market fell. It fell a lot. It fell more than ever before, even more than it fell on 9/11.

Of course, when I say “the market,” I’m talking about the Dow Jones Industrial Average, which isn’t really the market, it’s just an indicator of the market. And the market isn’t our economy, it’s just an indicator of our economy.

Look at it this way. The Dow was down to somewhere around 10,600 a couple of weeks ago. Then, as the bailout bill started working its way through congress, it went higher for a while, as everyone in the financial sector thought they were going to get a few hundred billion dollars without having to work for it. Now that they’re not getting the money, the Dow is back down to around 10,400. Which is probably where it belongs.

The point is, the Dow wouldn’t be jinking around like this if the politicians weren’t screwing around with this bailout. Instead of trying to judge the market and handle their money wisely, everyone is busy trying to guess what congress will do. Or worse, trying to change what congress does.

For example, if you’re running a financial institution, and you’ve got a lot of “toxic” securities, you might have been thinking of accepting another institution’s offer to take them off your hands for, say, 30 cents on the dollar. It would be a loss, but you’d receive liquidity in return. However, as long as Treasury Secretary Paulson just might get a $700 billion authorization next week to buy them from you at a higher-than-market price, you’re going to sit tight and see what happens, aren’t you?

I think a lot of this market volatility is really just an effect of congressional volatility.

I hope.

I just noticed that Windypundit is up to Google PageRank 6!


Last time I hit PR 6, about a year and a half ago, it didn’t last very long. This time, I’m going to try to make it stick. I suppose the best way to do that is to publish high-quality, timely, and original content that attracts attention and starts discussions in the blogosphere. In fact, I’d like to think that’s what I’ve been doing all along.

But what if I’ve already gone as far as quality content can take me? What if, in order to go further (PR 7, where the cash really rolls in) I’ll have to do something more? Clearly some SEO tactics may be advisable. To that end, I’m going to pursue a multi-pronged strategy.

First, I’ve begun a program of small improvements. For example, I just took the menu at the top of the page and moved the code for it to the end of the page as sent from the server. When the page finishes loading, a bit of Javascript moves the menu to the top of the page. This shortens the apparent load time, makes the page easier for the visually impaired to navigate (because their page reader doesn’t have to skip all the menu links), and moves the blog content closer to the top of the file for better search engine indexing.

Second, blatant link whoring. (See title of this post.)

Third, in order to encourage you folks to post my stuff to sites like Digg or Reddit or, you may notice that I’ve added a few social tags at the end of each blog entry. Like this:

I’ve been exploring the new version of the Movable Type blogging engine, and I’ve decided to try turning on some of the caching options.

For various reasons, I run Windypundit in dynamic publishing mode, which means that every time someone refreshes the page, the back end rebuilds the entire page from scratch. That’s a little slow, but the new Movable Type allows me to specify parts of the page that are generated once and then cached, so that next time someone requests the page, those parts are pulled from the cache instead of being rebuilt from the database.

I’m not sure any of you will notice a change. Most of the loading time for Windypundit is spent on third-party Javascript thingies such as advertising and statistical counters.

Let me know if you notice a difference. Especially if I broke something.

Over at Marathon Pundit, blogger John Ruberry accuses Barack Obama of being a “free speech phony” and quotes with approval from an editorial by Ann Woolner:

When WGN-AM Radio in Chicago scheduled a two-hour interview last week with David Freddoso, who wrote The Case Against Barack Obama the campaign sent out an alarm to supporters, sparking an avalanche of angry phone calls to the station.

I think this misses the mark. It’s one thing to try to shout down an opponent trying to give a speech in an auditorium, but Freddoso was appearing on a talk show. People are supposed to call in to talk to the guest. Executive producer Zack Christenson has only said that the extra volume of calls made it more difficult to run the show, but the show still ran and Freddoso still got to say his piece. Calling this an attack on free speech is silly.

Woolner tries to characterize the incident as a deliberate attempt to “jam a radio station’s phone lines with angry callers” and argues that the Obama campaign should have sent someone to the station for a debate.

Maybe. But asking supporters to call the station is certainly a reasonable alternative. The proper response to “bad” speech is “good” speech, and that’s what the callers where doing. Woolner is just arguing about who should be delivering the speech.

What’s especially odd about Ruberry’s excerpt of this piece is that there are clearer examples of the Obama campaign’s attempts to suppress opposition speech.

For example, the National Rifle Association is running this ad, accusing Obama of all kinds of anti-gun nuttiness, which may or may not be true. I’ll let Jesse Walker explain the problem with the Obama campaign’s response:

Instead of, say, crafting a response ad, Obama’s team had general counsel Robert F. Bauer send stations a letter arguing that “Failure to prevent the airing of ‘false and misleading advertising may be ‘probative of an underlying abdication of licensee responsibility.'” And, more directly: “For the sake of both FCC licensing requirements and the public interest, your station should refuse to continue to air this advertisement.”

(Copy of the letter here.)

So, while the stuff John Ruberry was complaining about earlier is not worth worrying about, this is a genuine threat to use the government to squelch what someone is saying. It makes me wonder about the things Obama will try to do if we actually put him in charge.

(And while we’re at it, I don’t think the NRA is totally off the mark. Bauer’s letter includes a detailed explanation of how the NRA twisted Obama’s position on guns, and they didn’t have to twist very far. His statements on gun control have left him a lot of maneuvering room, and the NRA was able to use some of it against him.)

On the other hand, when it comes to using the law to attack election-related free speech, Obama’s just playing it by the book. And John McCain wrote the book.

Thanks to the McCain-Feingold Law and others like it, when a group of Americans wants to band together to discuss politics with other Americans, they need permission from the government. It’s called campaign reform, but it’s arguably the greatest attack on free speech in my lifetime.

The bailout plan has apparently hit a snag after a meeting of congressional leaders at the White House broke down into a “contentious shouting match.” Add to that the failure of WaMu last night and I think the folks on Wall Street are going to go apeshit react strongly.

Then again, if I could really predict what happens on Wall Street, I’d be an advisor to a large investment fund, and they would treat me as a god.

Update: As Tim Cavanaugh reminds us, my inability to predict the market is rivaled by that of Treasury Secretary Henry Paulson, who’s been seeing doom in every down-tick for a year now.

Update: Actually, people who pay more attention than I do probably weren’t surprised by the WaMu failure. Shares declined from $35 a year ago to $1.69 yesterday, so I’m guessing the market isn’t really going to be all that shocked this morning.

Update: Eh, the market open wasn’t so bad.

I just upgraded the Movable Type blogging software that powers Windpundit from version 4.01 to version 4.21. I did it for all the usual reasons—better, faster, stronger…

No, maybe not stronger.

Movable Type is supposed to be easy to upgrade. Just download the gzipped archive of the latest version and dump it right on top of the existing MT installation. Then I just login to the control panel and it kicks off the automatic upgrade process which integrates the new data files, updates the database, and so on.

Everything seemed to go pretty smoothly. I did the upgrade early this morning and Windypundit was back up in a few minutes.

Then I tried to log in and post something, and all I got was a missing-file error. No menus, no posting interface, nothing.

I poked around and couldn’t find anything, so I logged a support ticket at Six Apart, who make the Movable Type blogging engine. I also logged a support ticket with my web hosting provider, Downtown Host, in case they saw anything unusual on the server.

The Downtown Host people got back to me pretty quickly, and we exchanged a few ideas, but they couldn’t find anything. An hour later, Six Apart sent me a message back asking for information and pointing out that my support agreement had expired.

The Six Apart support agreement costs $99 per year, but I decided to renew it because last year they helped me with a problem that I never would have found myself. After renewing, I answered their questions and told them I had renewed my support agreement.

Two hours later, they asked a couple more questions.

After another hour, they suggested the problem might be in the ImageMagick toolkit used by MovableType. I had found dozens of 25MB core dumps from the perl interpreter on the web site, indicating that perl had crashed while trying to build the main user interface dashboard.

I asked Downtown Host to reinstall ImageMagick for me, and they did, but that didn’t help.

After this, I tried something on my own. I dumped the fresh Movable Type 4.21 install into a separate folder and renamed the folders so that the fresh install would run Windypundit. Then I tried to login to the publishing back end again.

This time it worked. Of course, without all the custom templates and plugins I use, the main Windypundit front page was totally hosed up. But I had proven that the problem was with something in the Movable Type software folder—as opposed to a database problem or a server configuration problem—and it was some file that my old folder had in it that was different or missing in the fresh install.

So I put my upgraded MT folder back and downloaded both it and the fresh install to my PC, ran a comparison between the directories, and spent started poking about temporarily deleting or changing files on the live website until I finally found the change that made it start working again.

Movable Type is indeed mysterious. I don’t know how, and I don’t know why, but all it took to get Movable Type working again was to delete one small image file sitting in the mt-static/upport/uploads folder.

Here. Take a look at the culprit:


That’s Joel Rosenberg of Twin Cities Carry. I guess he tried to upload a profile picture of himself when he was leaving comments on my blog, and somehow that one file made everything blow up.

When I first spotted the headline that some guy was charged for the crime of farting, it just struck me as one of those inexplicable voids of common sense. The summary at WSAZ explains everything:

When police were trying to get fingerprints, police say Cruz moved closer to the officer and passed gas on him. The investigating officer remarked in the criminal complaint that the odor was very strong.

In other words, the charge sheet may say something about Battery, but the real crime was clearly Disrespect of Cop.

(Hat tip: John H. Bryan)

This is probably wrong in so many ways, but why are we helping the bad financial institutions? Wouldn’t it make more sense to help out the good ones?

I think, first of all, that the plan is not to simply give away the $700 billion. Instead, the U.S. Treasury will take over bad mortgage investments. I think the way this works is that if the government buys $100 million in bad mortgage investments and, say, only gets back 75 cents on the dollar, the government will have spent $25 billion to add $100 billion in liquidity to the economy. At that rate, spending the full $700 billion will free up $2.8 trillion from bad investments. (I have no real idea if these figures make sense.)

Second, as I understand it, the big fear in this crisis is that a series of institutional failures will cause a credit crunch that makes it hard for companies to operate from day to day and impossible for them to expand. This could cripple production and produce a huge involuntary contraction in our economy. Preventing this credit crunch is why we want to add liquidity by pouring in cash.

But why do we have to pour cash into the bad banks? Wouldn’t it add just as much money to the credit markets if we poured the money into the successful banks?

As for the bad banks, we just let them bleed to death in the street. The remaining banks, now flush with U.S. Treasury cash, will fill in the gaps and prevent a credit crunch.

This solves the credit crisis, avoids rewarding financial institutions for their failure, and because we’re lending the money to financial institutions that have not driven themselves into the ground, probably costs less.

One of the creeds of the economist is that there’s no such thing is a free lunch, and this sounds like a free lunch to me. That means I’m probably misunderstanding something important about financial markets, and my plan is hugely flawed.

But I’ll bet it’s not the craziest plan you’ll hear before this is all over.

As an economics blogger, I feel I should say something about the current economic crisis hitting our financial institutions. However, my libertarian philosophy isn’t helping me as much as I’d like when it comes to the current financial crisis. It’s not that pure free-market economics doesn’t provide an answer. It does. I’m just not confident it’s a good answer.

The straightforward libertarian response to the plunging prosperity of these giant financial institutions is simple: Let them splatter on the pavement, then let the remaining financial firms pick at the remains like vultures gobbling up the juicy bits.

(It’s possible I’m more angry about this than I realized.)

This plan is the classical microeconomic prescription for all failing enterprises: Let them fail so their resources can be put to more productive use. This approach has the advantage of requiring no legislation or government funds. It also serves as a lesson to other financial institutions that they should be more careful because they’re not going to get a bailout.

The problem with the let-em-bleed approach is that such massive disruptions of the financial markets might end up affecting the real economy, slowing the production of goods and causing massive unemployment. Don’t ask me how. I don’t understand financial markets well enough to explain it. But enough people are worried about it that I’m willing to believe it’s possible.

Preventing that won’t be easy, even with careful thought, and we aren’t going to get careful thought:

Because the markets are eager for a final deal and because Congress is trying to adjourn for the fall elections, lawmakers are bypassing the normal committee process and working toward an agreement in hopes of votes in both chambers within days.

Part of what makes this so difficult is the need to prevent macroeconomic disruptions without rewarding financial institutions for taking on too much risk, and thus creating a massive incentive for them to keep on making the same mistakes.

One approach would be a policy that before we bail out a financial institution, we first shoot the executives. A slightly less extreme solution currently under consideration is to add a provision to the bailout bill requiring limits on executive compensation for firms that seek help. (I think much support for this provision stems from the obssessive hatred some people have for highly-paid executives, but it may make sense from a viewpoint of discouraging bailout-seeking behavior.) On the other hand, since we’re offering bailouts for the good of the economy, we want institutions to use them, so maybe it’s a bad idea to give the people who make the decisions a hard time.

Then there’s the push to do something to save homeowners facing foreclosure. We got into this mess by encouraging way too many people to buy homes, so I’m not sure we can stay on that path without running into even more trouble.

There’s also the problem of foreign banks. They want in on the bailout too. Ideally, there’s nothing wrong with that: The purpose of the bailout is not to save banks, but to prevent damage to our economy. If a foreign-owned bank is a large enough participant in our financial markets that its bankruptcy would cause us problems, then it makes just as much sense to bail them out as to bail out our own banks.

The problem with that line of thinking is that even though we’re only supposed to be doing the bailouts for the good of the economy, the recipients of the $700 billion in loans (or loan guarantees or whatever) will almost certainly benefit greatly, so we might want to try to keep it in the family.

My understanding is that large-scale liquidity problems produce externalities, which may make it good policy to use public funds to increase liquidity. However, the mere insolvency of a financial institution—no matter how large—is not a public problem. We want to help the economy, not the financial institutions. Unfortunately, the problems of illiquidity and insolvency are inextricably entangled, making it impossible to affect one without affecting the other.

I’ll even go so far as to say that no matter how much we try to make the bailout program about the economy, once it gets going and people stop paying attention it will eventually turn into a giant corporate welfare operation.

The foreign bankers clearly realize this. Just look at what they have to say:

Gaining access to the relief was a top priority for European foreign financial institutions with banking operations in the United States, according to officials in industry and government.

They argued that the reputation of Wall Street and the United States government would suffer immensely if properly licensed foreign banks in the United States were shut out of the system.

“Who would open a bank again in the United States?” asked one executive of a major European bank who has been following the discussions.

Who would care if they didn’t? If you don’t think you can operate a bank profitably in this country unless you are promised a massive bailout, we don’t want you to try. This is precisely the kind of bailout-seeking behavior we want to prevent.

Finally, what are we to make of this gem found in one draft of the bailout bill?

Sec. 8. Review.

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

Because everyone knows that boundless executive power is the key to national success.

The new Knight Rider series premiers September 24 at 7pm central time on NBC, and based on the first episode, it’s pretty true to the spirit of the original. By which I mean it’s kind of dumb.

I suppose I should include a pro-forma explanation of the series premise, for handful of people who don’t know it from the original ’80’s series: Super high-tech artificially intelligent car. That talks. And helps fight bad guys.

The two hour movie that served as its pilot showed a little promise, especially in the first half, which features K.I.T.T. operating autonomously much of the time. Which would sort of be the point of having an A.I.-controlled car, wouldn’t you think?

By the start of the first episode, the Foundation for Law and Government has been re-constituted, and we join Mike Traceur (estranged son of the original Michael Knight) in the middle of a mission, searching a building for a “package,” while K.I.T.T. sits outside scanning the building with its sensors.

Then things go wrong, then there’s a chase which includes the stupidest excuse I’ve ever seen for getting some characters naked. Then more chasing, some intrigue, a bit of action, and the show ends.

My inner child is most disappointed with the treatment of K.I.T.T., who no longer seems in control. For some reason, Mike seems to spend a lot of time actually driving K.I.T.T. himself, or at least he has his hand on the wheel, moving it back and forth entirely too much for the car’s speed.

In an especially bad scene, we see that Mike himself could use a little (non-artificial) intelligence, when a female villain shows up, distracts him with a glimpse of a tattoo on her breast, and pulls a gun on him, allowing her to hurt someone he’s supposed to be protecting.

All of this happens about five feet from where K.I.T.T. is standing, but the car does nothing to stop it. Doesn’t K.I.T.T. have offensive capabilities? If nothing else, couldn’t K.I.T.T. run her over? Deploy flash-bang grenades? Pepper spray? Taser? Honk the horn really really loud? Couldn’t it at least have used its sensors—shown to be capable of scanning deep into buildings—to spot the gun under her jacket and warn Mike?

And what’s the point of K.I.T.T.’s cool new Transformers-style conversion into a tricked-out “attack mode” that nevertheless doesn’t seem to include weapons with which to attack?

Mixed in with the action scenes is a bunch of 24-style intrigue, involving characters who refuse to help each other because of mysterious security concerns, without which the show would be over sooner.

By the end, I don’t care about Mike, or his mysterious past, or his maybe-girlfriend, or anybody on the show. I wasn’t expecting art, but a little drama would have been nice.

If you’re keeping track, we’ve followed the successful re-imagining of Battlestar Galactica with an unsuccessful re-imagining of Bionic Woman and now a dreary continuation of the Knight Rider series. Can Airwolf be far behind?

Dear Federal Government,

Please buy my Nikon 35mm f/2 lens.

I bought it in 2006 for $300. My thinking was that a lens at that focal length with that aperture—a fast normal prime, in photographer lingo—would allow me to take medium shots of people in low light. I thought I would get a lot of good pictures that way, but it’s not working out. I’m just not getting as many usable pictures with that lens as I expected.

Normally, I wouldn’t ask because I know you folks in the government are buying lots of important stuff for important government-oriented purposes, such as tanks, airplanes, and Alaskan public works projects.

However, I hear you folks are working the weekend to put together a plan to spend $700 billion dollars to buy up bad investments. For example, if a bank gives someone $200,000 on a home mortgage, expecting to get a sequence of small payments in return, but the payments aren’t coming, you’d buy the loan from them in the hope of selling it to someone else later.

That sounds like my situation. I gave a camera store $300 for a lens, expecting to get a sequence of nice photographs in return, but that’s not working out. I figure you can buy it off of me and maybe you’ll find someone who will have better luck with it.


Mark Draughn

P.S. I promise to go shopping with the money. Thanks.

Windypundit is published using the Movable Type blogging engine from Six Apart, and they’ve just released an interesting sounding update. I think I’ll switch to it in the next week or two.

I may have to rebuild the templates that create the look and feel of this site, but even if I don’t, I’m getting a little tired of the current look of the blog and I’d like to change it.

Any suggestions?

New stuff to add?

Anything I should borrow from another site?

Anything you want to see gone?

Leave comments please.

Moby Kip points us to this story by Jennifer Garza of the Sacramento Bee:

Last month, Rachel Bird exchanged vows with Gideon Codding in a church wedding in front of family and friends. As far as Bird is concerned, she is a bride.

To the state of California, however, she is either “Party A” or “Party B.”

Those are the terms that have replaced “bride” and “groom” on the state’s new gender-neutral marriage licenses. And to Bird and Codding, that is unacceptable.

My first reaction was that this was just more of the usual anti-gay griping—the bride’s father is a pastor who’s trying to start a movement for couples to refuse to sign the marriage form—and it may well be just that, but it’s their marriage, isn’t it? Why can’t they be a bride and groom if they want to?

When they saw the terms, Codding wrote “groom” next to “Party A” and “bride” next to Party B and submitted their license. On Aug. 16, they married at her father’s church.

On Sept. 3, the couple received a letter from the Placer County Clerk-Recorder Registrar of Voters informing them that their license did not comply with California law and that the state did not accept licenses that had been altered.

So, they literally would have been happy writing “bride” and “groom” in the signature boxes on the license, but some inflexible clerk wasn’t going let them get away with that kind of anarchy.

You know, those of us who support same-sex marriage have had to respond over and over to the accusation that it would “destroy marriage.” That has never made sense to me. My marriage doesn’t change when other people get married, regardless of whether the other couple is a man and a woman, a man and a man, or a woman and a woman. Marriage is not a scarce resource, there’s plenty of it to go around, and gay marriage doesn’t take anything away from straight marriage.

Or so I thought, until the State of California made a liar out of me.

“Those who support (same-sex marriage) say it has no impact on heterosexuals,” said Brad Dacus of the Pacific Justice Institute. “This debunks that argument.”

I know it’s a trivial issue, but thanks to the perversity of the government of California, the bigots are technically correct. Gay marriage does hurt straight marriage. Just a little, to be sure, but now we’re going to have to listen to all the I-told-you-so ranting.