Auspundits

America's Culture War

* By Lounge Lizard

Who can forget Sarah Palin's speech to the Republican Convention in which she accepted the nomination as John McCain's running mate?

Joe McCain, John McCain's brother, gave an insider's account of the speech in an article in The Australian of September 16 entitled The real barracuda.

In this article, Joe McCain revealed that the joke Palin told about hockey moms who, unlike pit bulls, wear lipstick, wasn't in the script. Indeed, she went so off-base during her speech that eventually the teleprompter operator decided to turn the thing off.

For the speech of her life, that demonstrated enormous self-confidence.

Lounge Lizard watched her as she spoke. He noted that she was a very fit and healthy looking person and that she was totally at ease with herself, her family and with being an American. She betrayed not the slightest hint of nerves.

She's tough.

She not only preaches conservative values but the choices she and her family have taken in life's journey demonstrate to ordinary Americans that she lives by those values.

And that drives the left totally nuts.

God Speaks On Politics

Ecclesiastes 1o:2:

A wise man's heart inclines him to the right,
but a fool's heart to the left.

Hehe... :P

More Notes On Financial Markets & Bailouts

I've been intrigued as to why banking directors haven't resorted to the age-old method of "director's valuations" to value their hard-to-value MBS and CDOs. And apparently, as I found out today, it is because the accounting standards do not allow them to do so. And mark-to-model is last in the accounting hierarchy of:

1) market price; 2) last traded price of similar instrument; or 3) mark-to-model.

My understanding is that because Merrill Lynch sold a bunch of CDO holdings at fire sale prices a few weeks ago, NAB had to follow suit and revised the value of similar holdings down (see number 2 above). That's just a vicious cycle.

This is just stupid. If governments can suspend short-selling and delay trading on a public exchange for an hour (as they did in Australia today), why can't they suspend mandatory mark-to-market for 12 months until the market stabilises (with a clear definition of stability)? Instead, governments are pumping billions into money markets and U.S. taxpayers will be on the hook to the tune of a trillion dollars to bailing out failing/flailing financial institutions.

The more I think about it, the more I think the world isn't going broke, if by broke we mean that the "true" value of assets are less than the "true" value of liabilities. At the moment, no one is trading any of the "toxic instruments" we are terrified of. As a result market prices are opaque and being further muddied by stupid restrictions on short sales and accounting mandated write downs that are forcing dead positions to be crystalised at silly prices (starting the whole cycle again). And lets not forget lots of panic.

The other note I would like to make is that we haven't heard a cogent argument from Paulson or Bernacke about why their massive bailout is needed. Why the rush? Why the size? Someone explain? For example, late this afternoon (Sydney time), Bloomberg was reporting that Treasury had requested that it be able to use the $800bn to buy whatever they liked (rather than it being restricted to mortgage related securities). Oh and they would like more money thanks. No explanation. Nothing. The government mandates that publicly listed companies continuous disclose to the market material information. But apparently it doesn't apply that them.

Newt Gingrich makes another valid point:

Implementation of the Paulson plan is going to be a mess. It is going to be a great opportunity for lobbyists and lawyers to make a lot of money. Who are the financial magicians Paulson is going to hire [to run the massive $800bn behemoth]? Are they from Wall Street? If they’re from Wall Street, aren't they the very people we are saving? And doesn’t that mean that we’re using the taxpayers’ money to hire people to save their friends with even more taxpayer money? Won't this inevitably lead to crony capitalism?

Where's the reset button?

Timely Revisionism To US Regulatory History

Roderick T. Long over at the art of the possible blog has posted a challenge to the popularly held notion that the United States of the 19th century was a free market utopia:

Every part of this story is false. To begin with, there never was anything remotely like a period of laissez-faire in American history (at least not if “laissez-faire” means “let the market operate freely” as opposed to “let the rich and powerful help themselves to other people’s property”). The regulatory state was deeply involved from the start, particularly in the banking and currency industries and in the assignment of property titles to land.

Read the whole thing. But in essence, the article argues that far from opposing regulation, business - particularly big business - have been strong proponents of regulation. The rather cogent argument presented by Long is that an unregulated monopoly/oligopoly is likely at attract greater competition due to the premiums it can demand from the market. This extra competition drive prices down as the monopolist/oligopolist loses their pricing power. That is why business prefer legal monopolies/oligopolies. Industries and sectors that can lobby for government regulation that keeps competition out, will entrench existing businesses' pricing power.

Long argues that these same businesses publicly rail against government intervention to maintain a thin veneer of protest and to give politicians the cover needed to enact these regulations.

That this should be so is not terribly surprising; wealthy, concentrated interests are inevitably going to have a greater impact on the political process than poorer and more dispersed ones. (Contrary to popular wisdom, which has the contrast gong the other way, it is only on the market, where the price system aggregates the preferences of the poorer and more dispersed, that the latter can systematically trounce the influence of business power.) What is more surprising is that such blatantly and thoroughgoingly pro-business legislation should have been perceived as anti-business. [emphasis mine]

However, I would dispute Long's account of business' duplicity with regards to regulation - at least as evidenced contemporaneously. Take business and their response to the pressure that has been building up over the last decade to enact a (global) carbon tax. For some time, earlier in the 1990s, business strenuously argued against it (profits would fall, jobs lost, capital investments mothballed, etc). Recently their tune has changed - even within the industries most affected. Consider the mining industry. Most mining companies are now not putting up a fight against the idea of a carbon tax. In fact, their annual reports and TV advertisements gloat about how environmentally friendly their operations are and the extent to which environmental risk mitigation strategies are incorporated into their business models. When the government is willing to shower business with free money, subsidies, I don't blame them.

It was only this week, that the Federal government announced a $A100m research centre that will fund research into carbon, capture and storage in league with the major energy companies. And only a few months after the Federal government handed out another $A35m to Toyota to research and build a green car in Australia which they were going to build here anyway. These regulations and subsidies increase the barriers to entry for new participants, or more pertinently, the production of complementary goods and services, maintain oligopolies' market power.

And if ever there were a clearer example of government supporting the anti-competitive practice of business, then it is the US Treasury's bail out of financial powerhouses drunk on their recent success not noticing the cliff that lay ahead. The Treasury Secretary was the former head of Goldman Sachs. He had brought over quite a few of his old IB mates to the Treasury. It should therefore not surprise observers that Paulson argued a catastrophe was facing financial markets were he not to receive carte blanche powers to distribute $US800bn + to ailing IBs and financial institutions. Part of me doesn't doubt the truthfulness of Paulson's argument - markets are manic and no trust is in the system. However, the cynic in me isn't satisfied. Arnold Kling fuels the cynic's fire.

H/T: Squirrel

On Civilisations' Existentialist Challenges

Brilliant essayist, Bill Whittle, in National Review:

When all is said and done, Civilizations do not fall because of the barbarians at the gates. Nor does a great city fall from the death wish of bored and morally bankrupt stewards presumably sworn to its defense. Civilizations fall only because each citizen of the city comes to accept that nothing can be done to rally and rebuild broken walls; that ground lost may never be recovered; and that greatness lived in our grandparents but not our grandchildren. Yes, our betters tell us these things daily. But that doesn’t mean we have to believe it.

These words should sound familiar to readers of Auspundits. That is because it resembles very much the words of Christian writer Malcolm Muggeridge. Words that I am oft disposed to quoting:

It is difficult to resist the conclusion that 20th century man has decided to abolish himself, tired of the struggle to be himself, he has created boredom out of his own affluence, impotence out of his own erotomania and vulnerability out of his own strength. He himself blows the trumpet that brings the walls of his own cities crashing down, until at last having educated himself into imbecility, having drugged and polluted himself into stupefaction he keels over a weary old Brontosaurus and becomes extinct.

Similar words were spoken by Alexander Solzhenitsyn's in infamous 1978 Harvard address:

…no weapons, no matter how powerful, can help the West until it overcomes its loss of will power…weapons become a burden for the capitulating side. To defend oneself, one must also be ready to die; there is little such readiness in a society raised in the cult of material well-being. Nothing is left, then, but concessions…the next war…may well bury Western civilisation forever.

On The Love Of God

I just finished reading a brief, to-the-point, systematic treatment of The Difficult Doctrine of the love of God by Don Carson. Although it was brief, it was juicy.

Carson tackles some of the hardest and seemingly irreconcilable elements of God's being: his love and his sovereignty; and his love and his wrath. All of these elements of God are undeniable in the sense that the plain reading of Scripture reveals them. Carson takes it a step further, unpacking a solid theological basis for demonstrating that God's love is not irreconcilable to his sovereignty nor to the expression of his wrath.

Carson argues that God's love is expressed in five ways: the intra-Trinitarian love in the Godhead; providentially to all he made; salvifically toward fallen creation; effectively toward his elect; provisionally or conditionally to his own people. Once he sets up these categories, Carson goes on to argue that were we to remove any one of these categories, we would reduce God to something less than he is: omniscient, omnipotent, immutable, sovereign, transcendent, holy, loving, just, merciful and so on.

Notes On The Financial Market Turmoil

First a disclaimer. If you act on anything I write below, you are a goose. These are, as the title suggests, notes on the shockwave rippling through the global financial system. Not advice. Not investment tips. Go see your broker at Lehman Brothers or Merrill Lynch for that.

The Federal Reserve and U.S. Treasury Department have refused to step in and save Lehmann. They refused to buy them out (like they did with Freddie and Fannie) or provide cheap financing or guarantees for potential suitors (like they did with Bear Sterns). Namely, they turned to the big banks and said, "Enough work on our part. Your turn." Contrary to what you might read in the AFR tomorrow morning, this is a good thing. And it is a good thing because we are seeing moral hazard rush out of the financial system. This is going to cause some short term pain as everyone adjusts, but long term, this is a good thing.

Lies, Damned Lies & Journalism

* By Lounge Lizard

In a recent post, On Palin's Sambo Comment, Manny draws our attention yet again to the main-stream media's (MSM's) willingness to publish unverified rumour and innuendo if it happens to suit their generally left-wing political agenda. The latest target is, of course, Sarah Palin, a backwoods yokel who confesses, horror upon horror, to being a Christian and who just happens to be in charge of an administration with some 15,000 employees, net assets of over $US 50 billion and revenues of over $US 14 billion per annum.

By now we've become inured to the media's persistent failure to undertake elementary fact-checks and its constant repetition of falsehoods, especially when reporting on Republicans in the US generally and George W. Bush in particular.

A classic example is the old "plastic turkey" canard, which still won't die. As Tim Blair notes:

George W. Bush’s plastic turkey has ruled the global mediascape, from the Guardian to Pravda and the ABC, from the Sydney Morning Herald to the New York Times. This mighty bird, feasting on rich crops of gullibility and ignorance, may outlive the Bush administration. For as long as there are those who believe, the plastic turkey will remain forever real!

Notes On Desire & Joy

I have in a previous post, discussed Joy and its role in the life of a Christian. As I noted then:

God provides [David] with joy in abundance and peace when he sleeps (whilst unguarded from his enemies). Thinking on this, it is clear that I don't think I can unhesitatingly confirm David's experience. Sure there are times when this has been true. But it's patchy.

In The Weight of Glory, C.S. Lewis makes the following observation:

Our Lord finds our desires not too strong, but too weak. We are half-hearted creatures, fooling about with drink and sex and ambition when infinite joy is offered us, like an ignorant child who wants to go making mud pies in a slum because he cannot imagine what is meant by the offer of a holiday at the sea. We are far too easily pleased.

Similarly, in another book, The Four Loves, Lewis argues that:

It remains certainly true that all natural loves can be inordinate. Inordinate does not mean 'insufficiently cautious'. Nor does it mean 'too big'. It is not a quantitative term. It is probably impossible to love any human being simply 'too much'. We may love him too much in proportion to our love for God; but it is the smallness of our love of God, not the greatness of our love for the man, that constitutes the inordinacy.

Namely, it is not the greatness of our love or pleasures in things this world offers - they are gifts God gives - but the inadequacy of our love of God - the one that gives - that stifles fulfilment and joy. As Christians, our life should be dedicated to seeking God's kingdom and his righteousness, turning to that bloodied yet vacant Cross grateful for Jesus' sacrifice and redemptive work, and praising God for the things he gives us - the good and the bad.

It is the because of the smallness of our love of God, that his Joy beams in our hearts so obliquely (or at all). Un-godly hedonism is, as Mark Driscoll puts it in On Who is God:

...sin and worship of someone/something other than God [which] is fun for a while, [but] eventually pleasure boomerangs into pain and life becomes dark.

Godly (or Christian) hedonism's (When I don't Desire God: How to fight for joy, John Piper) guiding principle is:

God is most glorified in us when we are most satisfied in him.

Costa Is Spot On

Michael Costa in today's Daily Telegraph:

At the heart of modern politics, is a fundamental dishonesty that politicians and government can solve problems that are inherently unsolveable (health, happiness, wealth). And politicians that promise solutions to these types of problems are dishonest and worse still they corrupt the political system by undermining what the system is good at providing - imperfect, transitory compromises that keep the place ticking over

Add this to his AGW scepticism, and I think that this is a man I would be content voting for as either Prime Minister of Australia or Premier of New South Wales.

Acknowledging the inherent limitation of governing an imperfect world is the beginning of political wisdom. That is why I am a conservative / libertarian. Now if the tools on the other side of the aisle got their act together and started believing the political theory their party espouses, perhaps Costa might find a home in the Liberal Party.