Dude, Where's My Recession?

(1,000,000 thanks to James Pethokoukis for that line! Sadly, those are 2001 thanks, equivalent to about 920,000 thanks today...)

Don Luskin is at Disneyland:

THANK GOD THERE'S A GLOBAL RECESSION GOING ON Otherwise Disneyland would be really crowded! This photo was taken this morning at the front gate an hour before the park opens to the public -- this is just the "magic morning" people staying at the park's various hotels, who get admission one hour early. They've lined up like this at 7:00 am.

I'll admit you can go too far with this anecdotal stuff. But every time I sit and wait in the Starbucks drive-through in the middle of a weekday afternoon, I bore my wife with the same observation.

Not to say things are perfect, but a lot of people still line up at Disneyland and to buy $4 coffee on Thursday afternoon.

Nostalgia for 2005

Stop the presses! Federalism works. Lower taxes increase prosperity -- as does reduced regulation.

In an article in American Magazine called The Path to Prosperity, (Do they have to pay Larry Kudlow to say that?) Amela Karabegovic and Alan W. Dowd summarize a report to which each contributed.

Common sense tells us that low taxes, limited government, and flexible labor markets will help to spur economic growth. The Fraser Institute’s 2008 Economic Freedom of North America (EFNA) report offers a striking, yet unsurprising, picture of the benefits that flow from such policies.

In 2005, the most recent year for which data are available, Colorado, Georgia, Delaware, North Carolina, New Hampshire, Tennessee, and Texas—states with consistently strong records of promoting economic freedom—had an average per capita GDP that was more than $4,300 above the U.S. average. Their total growth from 1981 to 2005 was nearly 20 percentage points higher than the U.S. average.

The report attempts to rank the 50 states and 10 provinces in freedom and economic activity as Fraser Institute’s Economic Freedom of the World index has done for countries.

What struck me as a resident of a highly ranked state was fear that the most recent data came from 2005. Colorado elected a Democratic Senate and reelected a Democratic house in 2004. Democrat Bill Ritter was elected governor in 2006 to replace Republican Bill Owens. Owens was dedicated to freedom and low taxes.

The new regime will not be so friendly to the taxpayer or employer. No doubt the state will fall in the growth rankings as well.

Drill, Drill, Drill and King Dollar

I guess it is safe to say, sadly, that I am more like Larry Kudlow than Paris Hilton after all.

My comment on the Everyday Economist referenced in my Paris Hilton post engendered a thoughtful response from the EE. With his permission, here it is:

1. I mostly agree with your centrist position.

2. The government already uses the SPR to manipulate prices. The government has stopped filling the SPR, which reduces oil demand each day. Also, it uses the SPR when it believes that oil is priced above its fundamental value each time there is a natural disaster that creates supply disruptions and even did so during Desert Storm.

3. I do not believe the oil price reflects fundamentals. This is not to say that I know the correct price (although if you ask Vince Farrell he will tell you that oil typically trades at marginal cost, which is currently around $75). As you know from reading my blog, I do not believe in market failure -- at least as it is defined by mainstream economists. Markets are efficient so long as voluntary transactions are taking place as this signals that each individual is better off. However, we are not talking about free markets here. A large number of oil producers are countries rather than companies. In addition, the world remains awash in liquidity and the Fed is holding interest rates at artificially low levels.

4. A temporary increase in the supply of oil would lead to a decline in the price -- even if individuals know that the increase is likely temporary.

5. The Drill! Drill! Drill! plan will not be successful if real interest rates remain low. If the expectations of future prices are rising anywhere above zero at the moment, it is in one's best interest to keep the oil in the ground. One of my biggest pet peeves is that people fail to mention this on Kudlow's show when the Democratic talking points about unused permits gets thrown around. We need a three step process: (1) release some of the SPR, (2) Begin raising interest rates, and (3) start drilling. The problem is that there are too many players involved to believe that any combination of the three will take place. Instead, we will get promises of windfall profit taxes, rebate checks, "accountability", etc.

We're not way apart, and he his dead on most of his points and his conclusions. I don't hold out much hope for higher interest rates and disagree that drill-drill-drill by itself is not a great step.

It is my understanding that oil fields vary widely and wildly in their marginal cost; the $75/bbl figure he offers would be an average. By opening more fields, I expect they will find some that are more than 75 -- and probably some more than 150. But won't they also locate some more fields that are less than 75? Then they could pump the cheaper ones now at a profit at today's cost. They could leave the more expensive oil in the ground, discounted at his negative interest rate, against future rate increases and expectation of better future extraction technology.

Though I think it would be specious, I suggested it might be good politics to open the SPR and tie additional drilling to refilling. This would silence the "won't help for 750 years" crowd, prop up the Obama campaign, and provide instant additional supply without compromising future protections of the SPR. Drain it and refill it with new production. The feds could even hold futures to fill it as part of the bill.

Me, Larry, and Paris...

McCain vs Obama on Taxes

The clearest example of why voting for McCain is the smart thing to do.

(tip to MyMcCainBlog)

Michael Moore, call your Office!

Gimme that old time socialized medicine. BBC:

The cleanliness of most NHS hospitals in England is threatened by frequent invasions of rats, fleas, bedbugs, flies and cockroaches, a report claims.

Figures released by the Conservatives show that 70% of NHS Trusts brought in pest controllers at least 50 times between January 2006 and March 2008.

Hat-tip: Samizdata

I'm Just Like Paris Hilton

Like Ms. Hilton, I have found a centrist position between two schools of thought on energy.

School of thought #1 is well represented by blog friend The Everyday Economist. In an interesting post, Hendrickson links to "an advanced copy of Paul Davidson’s article on oil speculation prior to its publication in the July/August issue of CHALLENGE." I recommend the entire post and linked article, but the EE gives us a synopsis:

As I have previously expressed, the rise in oil prices cannot be fully attributed to supply and demand because interest rates are at historically low levels (short-term real interest rates are negative). Thus there is little incentive to extract oil from the ground when the rate of interest is below the rate of growth in the price of oil.

Davidson's article recommends the use of the Strategic Petroleum Reserve (SPR) to break speculators, who have bid up the price beyond what Davidson says is supported by supply and demand.

I left a long comment on the EE site, but the short version is that I trust a vibrant international commodities market above government manipulation of supply with the SPR, and believe that a large and continuing addition to supply through drilling would have more impact on futures.

School of thought #2 is represented by one Lawrence Kudlow. Drill, drill, drill!

The drill, drill, drill political scenario coming out of Washington and spreading throughout the country is really helping Fed policy right now. Since President Bush launched his offensive to roll back the drilling moratorium, the oil price has dropped more than $30 from near $150 to below $120. The barrel price is actually down again today to around $118. In connection with the big oil drop, gold has fallen and the dollar has appreciated. Gas prices at the pump have come off about 25 cents. Presumably, headline inflation will moderate a bit next month.

So you might say drill, drill, drill along with reduced energy demands is lending a big helping hand to the Fed’s inflation worry.

Like Paris, I don't find these positions mutually exclusive. Let's open drilling both on the Outer Continental Shelf and in ANWR. Then, let's use the SPR to speed this new production to market, releasing a significant amount with the understanding that it will be refilled from new supply sources.

I'm pretty hot myself, huh bitches?

Semper Fi!

LA Times:

U.S. Marine Cpl. Garrett Jones was deployed to Afghanistan just a year after losing his left leg to a roadside bomb while serving in Iraq as an infantry fighter. In previous wars, Jones would have received a medical discharge and returned to civilian life. But in the Iraq and Afghanistan conflicts, the Pentagon has made it possible for some amputees to return to duty.

Awesome!

Hat-tip: Hugh Hewitt

The Obama Energy Plan

Not the tire gauges, the kinda-sorta real one.

I was disappointed to see Glenn Reynolds and a good part of the right-of-center blogosphere spin down a road of practicality. Senator Obama decrees a million plug-in hybrids by 2015, and all the geeks ask "could the grid handle this?" and "what will the power requirements be?"

Those questions are interesting, and well worth exploring when the head of General Motors, or T. Boone Pickens calls for a million hybrids. When a major candidate for POTUS calls for a million hybrids, the more correct question is "Who the hell do you think you are?"

This is not yet the Soviet Union, and even with a House, Senate and Executive sweep it will be a few years before the Federal government is explicitly charged with production planning of automobiles (how many red convertibles, President O?) It is an affront to anybody who believes remotely in liberty that the President would proclaim a date, quantity, and style of vehicle.

This fits right in with Reynolds's attraction to the Zubrin mandate of flex-fuel vehicles and L. Gregory Mankiw's devotion to the Pigou Club. I agree with both the good professors 88.47% of the time, but am disturbed by their ability to drop first principles when a clever technical idea catches hold of their imagination.

The WSJ Ed Page comes a little closer, but still becomes too mired in details:

And yet there's more miracle work to do. Mr. Obama promises to put at least one million plug-in electric vehicles on the road by 2015. That's fine if consumers want to buy them. But even if technical battery problems are overcome, this would only lead to "fuel switching" -- if cars don't use gasoline, the energy still has to come from somewhere. And the cap-and-trade program also favored by Mr. Obama would effectively bar new coal plants, while new nuclear plants are only now being planned after a 30-year hiatus thanks to punishing regulations and lawsuits.

Problems like these are the reality of "alternative" energy, and they explain why every "energy independence" plan has faltered since the 1970s. But just because Mr. Obama's plan is wildly unrealistic doesn't mean that a program of vast new taxes, subsidies and mandates wouldn't be destructive. The U.S. has a great deal invested in fossil fuels not because of a political conspiracy or because anyone worships carbon but because other sources of energy are, right now, inferior.

I'm rarely the one around here calling for full frontal philosophy, but spending too much time describing why Senator Obama's plan cannot be done plays into his hand. He can call for a Manhattan project to fix the grid, financed by windfall profits from the oil companies.

Has anyone ever challenged the Senator on the propriety of government involvement? Senator McCain is not the ideal man for the task, but I think it would be a winner to occasionally suggest that there are actually some areas where government involvement is not a good idea.

UPDATE: To be fair, I missed an update. An Instapundit reader did a great job shooting this down:

1MM pluggable hybrids is nothing. It is less than 10% of cars sold per year. It should happen in a few years naturally without government intervention. As you note, the grid can easily absorb it. In fact, plugging hybrids (and their large batteries) into the grid might actually help stablize our creaky old grid if the charging is managed by the utility. It is likely that pluggables will largely replace 'spinning reserves' in that they can put power back when needed. I know of at least one startup that is marketing this capability. Network enabled energy storage elements will make the grid way better than it is now.

Obama's energy plan is lame for other reasons. At best, it mandates and subsidized things the market is already doing on its own. At worst, it will become yet another pork vehicle that crowds out true innovation. The best thing the government can do is remove barriers to permitting nukes (and maybe also to selling retrofit kits for older vehicles so they can become PHEVs) and otherwise get out of the way. Clever, greedy people will take care of the rest. Obama can then villify and tax them.

Not Sure She's 35

Other than that, we could do worse:

Thanks a Million, Oprah

Professor Mankiw links to a paper that examines the value of celebrity endorsements and suggests that Ms. Winfrey's support of Senator Obama brought him an additional 1,000,000 votes.

Craig Garthwaite and Tim Moore of the University of Maryland Economics department admit that there are substantial hurdles to accurately measuring the effect of any endorsement, but they do some reasonable extrapolation of Oprah's clout in book sales and other items featured on her show. Interstin'...

Requiescat in Pace

A blog that takes its name from Natan Sharansky would be remiss to not spend a few words on the passing of his great compatriot and fellow dissident, Alexander Solzhenitsyn. I'll offer links to better writers:

James Lileks (HT Insty):

Naturally, I was in the perfect mood to read the entire Gulag Archipelago. I got all three volumes from the drugstore – which should have told me something about the land in which I lived, that one could buy this work from a creaky wire rack at the drugstore – and it taught me much about the Soviet Union and the era of Stalin. After that I could never quite understand the people who viewed the US and the USSR as moral equals, or regarded our history as not only indelibly stained but uniquely so. Reading Solzhenitsyn makes it difficult to take seriously the people in this culture who insist that Dissent has been squelched. Brother, you have no idea.

Solzhenitsyn speaking at Harvard in 1978:

Some people sincerely wanted all wars to stop just as soon as possible; others believed that there should be room for national, or communist, self-determination in Vietnam, or in Cambodia, as we see today with particular clarity. But members of the U.S. antiwar movement wound up being involved in the betrayal of Far Eastern nations, in a genocide and in the suffering today imposed on 30 million people there. Do those convinced pacifists hear the moans coming from there? Do they understand their responsibility today? Or do they prefer not to hear?

The Wall Street Journal Editorial Page:

Solzhenitsyn warned of "an atmosphere of moral mediocrity, paralyzing man's noblest impulses," and a "tilt of freedom in the direction of evil . . . evidently born primarily out of a humanistic and benevolent concept according to which there is no evil inherent to human nature." His own prison-camp experience after World War II told him evil was all too real and had to be confronted.

However dourly Russian his warnings often were, Solzhenitsyn fortified the West with the truth and will to triumph in the Cold War. The great, inspiring irony of "Ivan Denisovich" is that it ends with Shukhov concluding that, even amid his icy prison, the day was "almost a happy one."

I read a funny article a few weeks ago about how Hollywood releases a new McCarthyism movie about every year to great fanfare, yet never a movie about the depredation of Communism. I wish they'd skip next years telling of the blacklist and trade it in for a heroic movie about this world hero.

Change

I received this via email:

Shhh. We Won.

Don't tell the NYTimes, or Senator Obama. But the war in Iraq is over and we won.

Bret Stephens claims this in his Global View column on the WSJ Ed Page. And I wholeheartedly agree. Stephens won a $100 bet from Francis Fukuyama "that Iraq would be a mess five years after the invasion." Stephens collected on the basis of troop casualties but takes the time to enumerate what has been accomplished.

Here's a partial list: Saddam is dead. Had he remained in power, we would likely still believe he had WMD. He would have been sitting on an oil bonanza priced at $140 a barrel. He would almost certainly have broken free from an already crumbling sanctions regime. The U.S. would be faced with not one, but two, major adversaries in the Persian Gulf. Iraqis would be living under a regime that, in an average year, was at least as murderous as the sectarian violence that followed its collapse. And the U.S. would have seemed powerless to shape events.

Instead, we now have a government that does not threaten its neighbors, does not sponsor terrorism, and is unlikely to again seek WMD. We have a democratic government, a first for the Arab world, and one that is increasingly capable of defending its people and asserting its interests.

We have a defeat for al Qaeda. Critics carp that had there been no invasion, there never would have been al Qaeda in Iraq. Maybe. As it is, thousands of jihadists are dead, al Qaeda has been defeated on its self-declared "central battlefield," and the movement is largely discredited on the Arab street and even within Islamist circles.

We also have -- if still only prospectively -- an Arab bulwark against Iran's encroachments in the region. But that depends on whether we simply withdraw from Iraq, or join it in a lasting security partnership.

After "Mission Accomplished," supporters are too chicken to use the W word. But I ain't: we won the war. Much work remains in Iraq, and the wider war continues, but Iraq has been won.

Ag Subsidies: Advantage McCain

Professor Mankiw links to Ernesto Zedillo's article in Forbes. Zedillo is concerned that people are blaming globalization for food shortages, and says "Blame Policies, Not Markets."

It is clear, however, that the most damaging distortions in agricultural markets originate in rich countries. There's little doubt that the present spiral in grain prices is closely linked to U.S. and EU policies enacted to boost production of biofuels. The American and European governments subsidize the production of biofuels, limit their import and mandate their use. The exact extent to which these policies have impacted food prices is still a matter of contention, but not even the most enthusiastic proponents of ethanol can deny that by inducing a greater allocation of agricultural resources toward biofuel production, the amount of grain available for food has been reduced.

Mankiw then reminds us to "Remember where the two presidential candidates stand on ethanol and the farm bill."

Charlie Gasparino on Obamanomics

Don Luskin links to a great NY Post editorial by former WSJ reporter and frequent TV guest Charlie Gasparino. Gasparino is not a favorite of Luskin's and I have had my differences with him, but we both give him props for this superb piece.

Wall Street traders are a gloomy lot these days given all the writedowns, losses and layoffs, but Obama makes them especially queasy. Many traders I speak to think the markets have yet to fully digest the impact of Obama's economic plan on stock prices. The guess is that it will hit after Labor Day, when the campaigning picks up and traders stop taking Fridays off to hit the Hamptons.

In others words, the markets could fall further from their already beaten-down levels once the street begins to focus on an Obama presidency.

Wait, you say: Wall Street's woes don't necessarily translate into Main Street problems. The markets can go down, but people still go to work.

Sorry, those days are over. Never before have Wall Street and Main Street been so intertwined: Nearly every American has a 401-k plan to save for retirement. Here in New York, city and state budgets rely on Wall Street bonuses for tax revenues like never before - just ask Gov. Patterson, who last week warned of budget disaster, largely thanks to the Wall Street slowdown.

One trader recently reminded me of another president who raised taxes and clamped down on free trade, as Obama seems set to do - just after the stock-market crash of 1929: His name was Herbert Hoover. And you know what happened next.

Worth a read in full. In case you don't make it, let me highlight one other line. Gasparino addresses the fact that Warren Buffett and a pile of other industry titans are supporting the tax raiser. Altruism? Nope:

I'm sure there's some noblesse oblige involved in all these CEOs' backing one of our most liberal pols for the White House. But I suspect the real reason the Wall Street elites like Obama so much is that it really doesn't cost them anything: They've already made their fortunes.

At bottom, Obama is about taxing wealth creation - not the piles of cash these guys have already accumulated.

While we're handing out kudos, Gasparino was also the perfect pick for a CNBC feature on Wall Street types who box over their lunch hour for stress relief. Big Charlie was the perfect pick. Maybe he'll get a pugnacious, pugilist Pulitzer...

Good McCain Slogan

I've been wrong before, but I kind of like:

"John McCain -- he looks a lot like those other presidents on those dollar bills!"

Obama Energy Plan

Perhaps the McCain campaign is finding its stride. I just answered this amusing call. If you donate $25 or more, you will be gifted with this handsome "Obama Energy Plan" tire gauge. Pretty funny stuff: Contribute

WaPo Headline

Y'know, I almost hate to beat up on the venerable Washington Post. They have provided more honest coverage of post-surge Iraq and the Obama campaign than most other media outlets.

But today, a Rasmussen Poll shows Senator McCain with his first lead, and my WaPo email leads with the headline: Obama Leads, Pessimism Reigns Among Key Group. It seems -- can I get a "mirabile dictu?" -- that the überliberal, collectivist Senator has a lot of support from "low wage" workers.

Obama's advantage is attributable largely to overwhelming support from two traditional Democratic constituencies: African Americans and Hispanics. But even among white workers -- a group of voters that has been targeted by both parties as a key to victory in November -- Obama leads McCain by 10 percentage points, 47 percent to 37 percent, and has the advantage as the more empathetic candidate.

There wouldn't be, I don't know, the slightest chance that a lot of these people are on the government teat programs and might have a fiduciary interest in some of Senator Obama's proposals?

The new poll included interviews with 1,350 randomly selected workers 18 to 64 years old who put in at least 30 hours a week but earned $27,000 or less last year. As a group, they are somewhat less likely to be Republicans than all adults under age 65 and are also less likely to be registered to vote. As many call themselves conservatives as liberal, and nearly four in 10 said their views on most political matters are "moderate."

Quite a scoop, WaPo, quite a scoop!

This Bud's For Me!

Mark the date: August 2, 2008. The day my beer snob license was revoked.

I went in to try a new place in my new home town yesterday (Old Town Erie has been a treasure trove of cool places to eat). I asked the waitress "what do you have on tap that's dark?" and she set me up with Bare Knuckle. I had never heard of it, but it was a creamy, grainy, nicety hopped stout.

"Who makes this?" inquires I. She has to return to the bar for an answer.

"Budweiser," replies she. At which point I am sure this woman is yanking my chain (These new town folk'll believe anything!) but a little Internet search backs her up. The good folks at Anheuser-Busch have been making this since 2004. It's a much lighter stout than Guinness -- earning howls of real beer snob derision at ratebeer.com. But it has its charms. I'll give it four stars, providing you don't follow their recipe for an "Irish American" and mix it 50-50 with Bud.

Pretty Cool Stunt!

House Republicans have not given me a lot to cheer about of late, but this is pretty cool:

Michigan Republican Mike Rogers returned to the House floor in shorts and sandals to take his turn at the podium, as the Republican talkathon continues on the House floor, hours after the chamber formally recessed for the week.

Looking like he was ready for the links in a pair of cargo shorts and a short-sleeve shirt, Rogers said he was preparing to drive back to Michigan when he pulled a U-turn and headed back into town.

"I had gotten in my car to drive home and I realized I didn't have enough money to pay for the first tank of gas," said Rogers.

Republican Rep. Rob Bishop of Utah was also spotted on the House floor in shorts and sandals.

Rep. Kevin Brady returned to thunderous applause when it was announced he had gotten off of a plane right before takeoff in order to deliver a speech. He said the day had turned things completely upside down.

"Normally they clap when I am leaving here with my bags packed," he said with a laugh. "Not the other way around."

As of 3:30, the speeches continued, with no sign of letting up.

Speaker Pelosi's stunt to shut down the House rather than lose a vote on drilling has been countered with a much more consumer-friendly stunt. Well, done lads!

As the WSJ Ed Page admitted, it is usually better to have Congress out of session, but energy prices have created a valid exception. As Larry Kudlow would say: "Drill! Drill! Drill!"

UPDATE: Instapundit brings this video. Here's my own lilustrious Senator showing gifted leadership:

UPDATE II: Terri at I Think ^(Link) Therefore I Err wonders where's the media coverage?

A Moo-Born

Friday calf blogging lives on, with an attractive new model, Dale, born last Sunday,