Assorted Links (3/12/2012)

Here’s a list of articles that I have been reading lately:

An Insurance Policy Against Inflation

“In The Wall Street Journal, Charles Calomiris writes that raising banks’ cash reserve requirements on deposits will reassure markets about the Federal Reserve’s intentions.”

Uncle Sam’s Teaser Rate

“The Wall Street Journal explains the risks to the federal budget deficit and taxpayers when interest rates inevitably rise.”  Quoting from this article, “Low interest rates disguise the federal debt bomb.” The problem reported here is that out of the $10.7 trillion in outstanding “publicly-held” debt, more than $8 trillion of it must be repaid within the next seven years and more than $5 trillion falls due within the next 36 months. Although the short maturity structure of this debt enables Treasury to “take advantage” of historically low short-term rates, it pretty much ignores a rather fundamental funding risk; the implicit assumption behind this policy is that the global capital markets will always be LIQUID ENOUGH to refinance the US Treasury debts as they roll over and need to be refinanced. For a “Public Finance 101” tutorial, I recommend my “Political economy and the (inflationary) future” posting from November 2010 which is available @

The Good and Bad in Eric Holder’s Drone Defense

“In The Wall Street Journal, John Yoo writes that the administration finally acknowledges there is a ‘war’ on terror, but it still prefers the law-enforcement paradigm.”

Debt, the American Way

“Banks are lending, consumers are borrowing and China is busy making us more stuff.”

A Look at the Global One Percent

“Carnegie Mellon economist Allan Meltzer notes that income inequality is a phenomenon that is commonly experienced globally, and that the most important long-term factor behind this has been the addition “… of a few hundred million Chinese and Indians to the world’s productive labor force after 1980 slowed the rise in income for workers all over the developed world… The top 1% gain relatively because they are less affected by the hordes of newly productive workers.”

Cochrane and the Economist on Dodd-Frank

Here’s an important quote from University of Chicago financial economist John Cochrane concerning the Dodd-Frank financial regulation law: “This point really nails the fundamental flaw of Dodd-Frank. It never really thought about what the most important core problems were, and how to fix them. Instead, it basically thinks we didn’t have “enough” regulation, so proceeds to “regulate” more, and to regulate anything vaguely associated with “finance.” But, not knowing what went wrong really, it’s approach is just to deputize appointed officials great power to write rules, or, more basically, direct affairs in real time.”

Buffett’s Tax Win

“The lawsuit against the IRS by Warren Buffett’s Berkshire Hathaway subsidiary NetJets to avoid paying $643 million in taxes that the IRS said it owed was the subject of a post here back in November. Now, the Huffington Post reports, NetJets paid $2.5 million to lobbyists who got Congress to change the law so the company doesn’t owe the tax…a $643 million return on a $2.5 million lobbying investment is a pretty good return on investment even by Warren Buffett standards.”

Reagan Was A Sure Loser Too

“In The Wall Street Journal, Main Street columnist William McGurn looks back to the 1980 presidential campaign and writes that conventional wisdom about this year’s Republican presidential prospects sounds mighty familiar.”

Psychos on Wall Street

“The easiest way to explain the never-ending string of Wall Street scandals and implosions is to observe that a surprising percentage of people in the financial industry are psychos, according to Al Lewis.”

Krugman and British Austerity

“So far as unrelated historical events provide any evidence, the historical evidence in Britain supports the view that spending cuts bring about larger economic recoveries than deficit spending does.”

MOOCs, Large Courses Open to All, Topple Campus Walls

“Massive Open Online Courses are free, non-degree programs that have been drawing top professors and are seen as a tool for democratizing higher education.”

The Chicago way

My home state of Illinois would do well to “spin off” Chicago if it could. As this article notes, “Chicago… has the dubious distinction of being the federal district with the most (1,828 most public officials) convictions since 1976.”

Limbaugh and Our Phony Contraception Debate

“In The Wall Street Journal, Family Research Council fellow Cathy Cleaver Ruse writes that law student Sandra Fluke is demanding that a Catholic school give up its religion to pay for her birth-control pills.”

Bishop Dolan’s Liberty Letter

“The Wall Street Journal on the Catholic Cardinal’s vindication of religious freedom and his chilling visit to the White House.”

Has the Facebook Friend Bubble Burst?

“More social networkers are “Unfriending” people on Facebook, a new survey reveals.”

The Fundamental Law of Road Congestion

“Most of us—including politicians—believe that building more and wider roads reduces congestion. However, research dating as far back as the 1960′s proves these benefits are generally temporary as vehicles soon fill new lanes.”

Book Review: Michelangelo

“Michelangelo” meticulously chronicles the first two-thirds of the artist’s life, including his work on the Sistine Chapel.”

France’s Class Warrior

“In an editorial, The Wall Street Journal considers François Hollande, who says his proposed 75% tax rate is ‘patriotic.'” Apparently the French Socialist Party and US Treasury Secretary (Tim Geithner) both think that making the 1/3/5/10 percenters pay high marginal tax rates is a matter of “patriotism” (see “Geithner and the ‘Privilege’ of Being American” @…

Conservatives and the Mandate

“In The Wall Street Journal, Business World columnist Holman Jenkins writes that ObamaCare is a specific instance of a broader truth about America’s health-care policy—it’s grossly regressive.” Also see “My preferred approach for reforming health care…” (located at for related commentary by yours truly :-)…

Geithner and the ‘Privilege’ of Being American

Quoting from this article by economist Lawrence Lindsey: “Last week Treasury Secretary Tim Geithner said that the “most fortunate Americans” should pay more in taxes for the “privilege of being an American.” One can debate different ways of balancing the budget. But Mr. Geithner’s argument highlights an unfortunate and very destructive instinct that seems to permeate the Obama administration about the respective roles of citizens and their government.”

The Other GM Bailout

“The Wall Street Journal on the $18 billion tax gift Obama didn’t mention.” Time to put on your green eye shades and follow the money!

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