Obama's Center Right Team

Some conservatives seem non-plussed by President-elect Obama’s picks for Treasury Secretary, Tim Geithner, and his White House economic team of Larry Summers and Christine Romer. What’s this left-wing radical doing appointing a center-right economic team? What indeed?

But uber-supply-sider Larry Kudlow is complimentary.

There is nothing to be surprised about. Nobody could know what Obama would do. He had no track record on economic policy.

He had a track record that showed him associating with left-wing radicals on his way to power. But that could have been mere opportunism, knowing that lefties would like helping a young (and Harvard-educated) black liberal.

And there is no need to feel betrayed, that a President Obama will take credit for a supply-side economic policy that makes Democrats look good. Assuming that he actually executes a supply-side policy.

Let’s not forget what Ronald Reagan said about this. It’s suprising what you can get done when you don’t mind who gets the credit.

No. What we conservatives want is to bury forever the class-warfare client-state economic policy that liberals instinctively want. Just as we wanted welfare reform even if President Clinton got the credit.

We don’t just want a supply-side economic policy for ourselves. We also want it for immigrant and inner-city Americans who will never get out of poverty with welfare state policies, but will get ahead with supply-side welfare society policies.

When a Democratic president moves the playing field and becomes a little bit supply-side, then Republicans can say: if a little bit of supply-side is so great, why not a little more?

What’s not to like about that?

Occam's Razor Cuts Again

It’s a red letter day for us global warming deniers.

Over at Climate Audit Willis Escenbach has done some analysis on the temperature proxies used in Mann et al. (2008), the paper thay updated MBH98, in which Michael Mann introduced the "hockey stick" to the world.

That first paper in 1998 shocked the world by showing that the earth’s climate was pretty steady for the last 1,000 years, only shooting up when the industrial revolution got really started in the mid-19th century.

This was important because previously everyone had thought that the earth had been warmer than today in a Medieval Warming Period.

But Eschenbach’s analysis shows that the “hockey stick” signal is only carried by two sets of data series, or about 25 proxies out of the total of 95.

One set of data are three Tiljander lake sediment series from Finland. Tiljander has advised that these data should not be used as temperature proxies because they are corrupted by urban development in the last century and a half.

The other set of data are mostly the various bristle-cone pine series assembled by Donald Graybill. These are all from high-altitude pine trees in the US southwest. Writes Eschenbach:

[Graybill’s] work has been called into serious question by Linah Abadneh’s thesis, wherein she was unable to replicate his results.

What happens if you throw out the Tiljander lake sediments and the Graybill pines?

You get a chart that shows a Medieval Warming Period, a Little Ice Age, and temperatures today that are lower than they were a thousand years ago. What a surprise.

Here's Obama!

Everybody’s been asking: “Where’s Obama” on just about everything. What’s his take on the auto bailout? Rush Limbaugh wants him to issue a statement promising no tax increases for a few years.

But at least there seems to be movement on the auto bailout, according to Bloomberg.

President-Elect Barack Obama`s transition team is exploring a swift, prepackaged bankruptcy for automakers as a possible solution to the industry’s financial crisis, according to a person familiar with the matter.

That is what they call a trial balloon.

And it seems that, from the various quotes from Washington barons of the realm, that the idea has some support.

It would probably be my preferred option. But whatever it is, it has to include haircuts all round.

The whole point of a recession is the liquidation of the malinvestments of the previous boom. Well, we are well into the liquidation of the mal-mortgages of the previous boom. Now it’s time to look at the malinvestment of the previous half-century in sky-high wages and benefits for auto workers.

It seemed like a good idea half a century ago, to promise good wages and benefits out of the huge profits of the auto companies. But things got a bit out of hand, as they do when politics gets involved in anything. Now it is time to face reality.

It’s time to get past denial, as our liberal friends say.

What New Deal?

Rumor has it that Obama’s advisors are planning some sort of a Big Bang program in January. As Rahm Emanuel told the Wall Street Journal’s CEO Council:

You should never let a crisis go to waste. [It lets us address long-term problems] in the health care area, the energy area, the education area, the fiscal area, [and] the tax area.

You can see what is coming, given that President-elect Obama represents the progressive educated elite. What is coming is an intensification of the power of the progressive educated elite expressed through the power of the political sector. They want to enact a hugely dirigiste program that puts government even more deeply into every area of American life. It’s a “new” New Deal.

That’s all very well, but as Holman W. Jenkins, Jr. writes in the Wall Street Journal, how about Obama cleans up the festering problems of the old New Deal that are just now wiping out the economy.

His real problem is the crack-up of the world FDR built.


Fannie Mae was a New Deal creation, subsidizing the securitization of mortgage debt. FDR’s successors piled on the subsidies for housing debt and incentives directed at low-income borrowers. Kaboom.


Then there’s the UAW, born in 1935. For decades the UAW steadily traded away domestic auto market-share to imports and transplants to keep its aging membership toiling away toward their golden pensions and collecting wages and benefits twice those of their competitors. It worked for a while.

But now Kaboom. Rahm Emanuel thinks that the answer to all these failed government policies is more of the same.

Of course, the problem wasn’t so much with the original New Deal policies, but the fact that the powers granted to the government and to its favored interests were so shockingly abused. The bright young men of the New Deal may have designed some useful programs. But then the bright young men went on to the next new thing, and the programs got taken over by time servers and placemen.

The same will happen to Obama’s government-centric ideas—assuming that they even work in the first place.

In my view, the increased centralization of health care, energy, education, and so on will hasten the day when the whole project of the progressive educated elite hits the buffers.

And the people that get hurt will be the trusting independent voters who just voted innocently for Hope and Change.

Not Your Father's GOP

Kathleen Parker is a conservative columnist who went off the reservation during the recent campaign with an article praising Christopher Buckley for endorsing then-candidate Obama.

Then she got some hate mail.

Now she’s got an article in the Washington Post that urges Republicans to get G-O-D out of the party.

The fact is that a number of elite Republicans don’t really like the idea of the Republican Party as the party of the aspirational white working class.

You’ll find, if you investigate, that a common denominator in aspirational groups is a belief in God. It goes back at least to the Protestant Reformation. And so, if the party of Lincoln becomes the party of Palin and Joe the Plumber you can expect a lot of God stuff. And that’s a problem to people like Parker.

To be more specific, the evangelical, right-wing, oogedy-boogedy branch of the GOP is what ails the erstwhile conservative party and will continue to afflict and marginalize its constituents if reckoning doesn’t soon cometh.

I’ve heard this from a number of conservative friends, professional types with money in the bank. And I understand. Enthusiastic Christians like the Christian conservatives of today’s conservative movement have always been an embarrassment to established conservatives. Their naivete, their faith, their certainty—well they just aren’t out of the top drawer.

Sorry. Count me out of the exodus. If the Republican Party ceases to be the party of the moneyed professional class and becomes the party of the aspirational working class, then I’d rather stay than quit.

In my view the aspirational working class has taken it in the chin these last decades. The political elite has made it more and more difficult to be independent and aspirational and we know why. Ordinary people are only interesting to a political elite if they are useful to its program of power. In the present western world, ordinary people are useful to the elite if they are victims. They are useful if they are frightened. They are useful if they are dependent.

The aspirational working class is composed of people that used to be victims. They used to be frightened. They used to be dependent. But now they are climbing. Now they are succeeding. They’d like the nation’s politics and culture to recognize their achievement and honor their culture.

It seemed like it was only yesterday that the political elite loved the white working class to pieces. That was when they were the principal victim group that the elite wanted to sponsor. But the elite has gone on from class warfare to race politics and gender politics—that’s where they mine for new victims today. Today the white working class is an embarrassment, with its bitter embrace of God and guns.

Anyway, so what if the Republican Party becomes the party of working-class and middle-class aspiration? There might be more people interested in that kind of party than you might think, God or no God.

Bail-out for the Banks but not for Detroit?

If we can spend $700 billion on a bank bail-out why not spend a measly $25 billion on the auto companies?

The simple answer is that we can’t let the banks go broke. We tried it, sort of, back in September when Lehmen Brothers went belly up. The fallout from that nuclear explosion is still irradiating us.

But the bankrupty of an industrial corporation is not so bad. The railroads went in and out of bankruptcy with regularity in the 19th century. And the world didn’t end when the Penn Central went bankrupt in 1970 (in a recession, of course). Corporations go bankrupt when they run out of equity. In crude terms, the stockholders get handed their heads and the bondholders get to own the company.

When you look at the balance sheet of General Motors, today, November 18, 2008, you see Total Assets of $110 billion, Total Liabilities of $170 billion, for a Total Equity of minus $60 billion. That negative equity is mostly an Accumulated Deficit of $61 billion. No much to go on.

The best solution for General Motors is to go into bankruptcy. Then the creditors can get together and decide what to do to get something out of the wreck. And then the politicians could decide what they would be prepared to do to help out. General Motors could keep operating, of course, during all this.

A lot of people are going to have to take a haircut over the failure of General Motors. Right now, too many of them are still in denial. So they won’t agree to a haircut until General Motors actually goes broke.

The haircut can’t start until General Motors declares Chapter 11.

Those Pesky Russkie UHIs

Last week was great fun for global warming deniers. There was an almighty cock-up on the monthly temperature front as NASA’s Goddard Institute of Space Studies released a “record” month temperature for October. Trouble was that the temperatures for a bunch of stations in Siberia were for September, not October. Not our fault, said the chaps at GISS. Blame the chaps at NOAA.

(Gotta love those government bureacrats and their CYA antics.)

But the real fun ensued later as the bloggers at Climate Audit and Watts Up With That started taking a look at the Siberian stations in question with help from Google Earth. The little Siberian towns where the temperature stations are located all have district heating systems, where steam is distributed from a central power station to heat the buildings in the town. What about the urban heat island effect from all that?

Then an alert commenter came in with the coup de grace. All the heat that is generated in a city, big or small, escapes into the environment, wrote Willis Eschenbach (04:05:35).

That’s why it doesn’t matter if the steam pipes are insulated or not … the main heat loss is from the houses and factories that are heated by the steam. All of the heat piped around the town ends up warming the environment.

Of course. The whole argument about the size of the urban heat island (UHI) effect is moot. Of course it’s there, and of course it is substantial. You just have to do an energy budget on a city, and figure that almost all the energy it uses, in electric generation, in space heating, in transportation, all of it, pretty well, is discharged to the environment.

And it ain’t chump change.