Greetings from China
Since updating FB or Twitter is forbidden, I guess I must go through the effort of an actual post. Here in Chengdu, our hotel has over $2 million in luxury vehicles parked out front. Times are obviously good, at least for some.
Along those lines I saw an American style “motor mile” ranging from Toyota to Maserati dealers. Still, the lack of a middle class is still apparent. Will post more observations later.
Update from Chongqing: I find it interesting that there is a city the size of New York that most in the West haven’t heard much about. We have the services of my wife’s brother who owns a vehicle and are busily checking it out. The coolest thing so far is without a doubt Wal-Mart!
How the dollar could save California
As is well-established by now, there are several fiscal problems confronting California and its citizens at once. To wit, we have crushing pension commitments to public employees that are very difficult to get out of, plenty of upside-down and unaffordable mortgages (despite the inept government efforts to prop up housing), and major budget deficits that are almost locked in place due to the various procedures in Sacramento.
What underlies all these problems? They are all based on obligations of US dollars. If we have uncontrolled inflation for a time, as bad as that would be, it could constitute a de facto bailout of California and other states in similar predicaments. The value of equities in dollars would likely rise if properly invested, and the liabilities themselves are not fully indexed for inflation.
Mortgage debt would shrink in real terms, as well as nominal, because home prices in many areas would have to rise. Take as an example a borrower owing $700,000 on a $500,000 home. Assuming a 30% inflation where the real value of housing is more or less stable, his real obligation becomes closer to $400,000 and the nominal loan-to-value ratio would be under 100% again.
Finally, California’s real liabilities would shrink somewhat. Taking all of these ideas together, you would see a more functional California at the expense of all the holders of US dollars around the world, and at the expense of more responsible state governments.
Not only is this a potential way out, it may be the only way out. I’d recommend against massive holdings of US dollars themselves and instead diversify into hard assets and other currencies as well as equities. And, as a nice extra touch you may want to borrow as many dollars as possible. This could end up as a pretty good trade.
Super Bowl prop picks
For entertainment purposes only, here are some wagers on today’s Super Bowl one might consider, if there is a legal wagering outlet in your local jurisdiction. I’ll update after the game with actual results.
Most of these go with the theme that defensive preparation will allow for some elements of the 2 offenses to get shut down today.
- Game UNDER 57 (WIN). [Not really a prop, but I think the defenses have a fighting chance today.]
- And similarly, 1st Quarter UNDER 10.5 -110 (WIN), 3rd Quarter UNDER 10.5 +110 (LOSS)
- Finally, Game UNDER 42.5, at 4/1. What the heck? (LOSS)
- Manning UNDER 2.5 TD passes (-130) (WIN). In all games since 2005 he has averaged about 1.6 per game, so getting an extra TD for the anticipated pace of the game should be enough to make this worthwhile.
- Bush UNDER 53.5 rushing+receiving yards (+120) (LOSS). Could certainly have a big game, but I will go against the hype at those odds.
- Austin Collie does not score a TD (-160). (WIN) He has 7 of them all year long, 3 against the Titans secondary…
- Dallas Clark UNDER 69.5 yards (-110). (LOSS) This is around his average for the year, but I believe he will get a fair deal of attention from the Saints D.
- Brees UNDER 300.5 yards (-110). (WIN) If they keep the game competitive and can mix up the offense, this should win easy. If it’s 21-0 Colts, watch out [check out previous losing Super Bowl QB lines]
- Darren Sharper is MVP (50/1) or Donald Brown (also 50/1). I can make up a scenario…
- Past posted: Saints +11 / UNDER 63 teaser (-110) (WIN)
- 2nd half OVER 28 (WIN) hedge.
Finished 8-4 not counting MVPs… not too shabby.
The excuses for bigger government we keep hearing
Ever turn on the TV and hear any of this?
- [Consumers/Parents/Children/Teens/Seniors] don’t have [information/time/brainpower] to make these decisions for itself, we need [insert regulation/ban/public service campaign here]
- “It’s gone too far — there is no choice left but to [insert more government here]“
- “It’s a slippery slope — we should nip this in the bud by [add government program here]
- “It’s not for people like you and me — the average American is who needs help with [insert government-enforced life choice here]“
- “We can’t leave it up to faceless corporations to [insert choice that any reasonable management would make here]
- “If not for regulatory mandate, we wouldn’t have [insert innovation here]
- Government must create jobs and drive economic growth by [insert dumb business here]
- In a post-9/11 world, government has to protect us by [insert liberty encroachment here]
Did I miss any?
Science project prompts SD school evacuation
Science project prompts SD school evacuation – SignOnSanDiego.com.
Forgive me if there is more to this story, but on the face of it this is the height of ridiculousness. You can bet that this administrative staff has spent 10 times the effort training for the incredibly rare events of school shootings and bombings than they have listening and getting involved with their students. (And, like all senior state employees, we’re also paying for their retirements with fat pension guarantees. Isn’t that great?)
Thoughts on the Macro Paradigm, Arnold Kling | EconLog | Library of Economics and Liberty
We are trying to let the banks earn their way out of losses, right?
Thoughts on the Macro Paradigm, Arnold Kling | EconLog | Library of Economics and Liberty .
Everything the Fed has been doing over the past fifteen months makes sense if you think of their goal as transferring wealth from taxpayers to banks. If you try to explain it as an attempt to implement an expansionary monetary policy, you won’t even get past my high school students.
If Health Care Is Going to Change, Dr. Brent James’s Ideas Will Change It – NYTimes.com
Interesting discussion of the healthcare industry here:
We have built up medical doctors in this country to be brilliantly intuitive gurus that are constantly making measured decisions. In reality, the result of all this coddling and sky-high spending on treatment is mediocre care. One face-palm quote:
Perhaps the clearest example is the Pronovost checklist. As many as 28,000 people in this country die each year from infections that come from intravenous lines. Several years ago, Peter Pronovost, a Johns Hopkins physician, developed a simple list of five steps that intensive-care doctors should take before inserting an IV line, in order to prevent the introduction of bacteria. The checklist reduced the infection rate to essentially zero at 108 hospitals in Michigan where it was adopted. Pronovost published the results in The New England Journal of Medicine in 2006. But most intensive-care doctors are still not using the checklist. To insert an IV line, they continue to rely on their own judgment.
National Report Card: 5 fixes for the US education system
The latest report on US math education is in, and results are disappointing many.
Compulsory state education is antithetical to libertarian principles. The sooner we move towards separating the school system from the state, the better. That said, plenty of other nations are doing a far better job. It’s not very satisfying to sit around, advocating bombing the schools and starting over. So, what can we start to fix?
- End compulsory attendance. It’s clear that disruptive and apathetic students should be redirected out of the classroom. Send them home, or send them to a practical vocational program where they can at least learn something like fixing cars, pipes or drywall. Those are pretty well-paid occupations, by the way. No one will send their children, you say? Have you considered the extraordinary lengths taken by parents to educate?
- Eliminate external support. In well-off neighborhoods, schools are of course fantastically better due to parental support. Since we believe in equal government, and apparently we want government-based education, how about outlawing all other outside financial support? If you wish to contribute to our education system, you can fill in a blank item on your tax return and pay as much extra to the IRS as you want.
- Raise community college and state university standards. We can’t let the next rung of the system function only for remediation of those who are failed by the high school system. By making it a little more difficult to enter community colleges we raise the value of the high school system.
- Make teaching a viable career. We need to attract real talent into long term careers in the teaching profession. Notice that if we had a free market system, this would be automatically taken care of, as successful schools could pay out the proportion of revenue they see fit. But, failing that, massive government guaranteed benefits set up for those who spend ten or twenty years in education might have an effect.
- We must make firing teachers easy. Right now it is close to impossible in many school systems to fire, even when clear misconduct is cited. Once we pump up their effective salaries to be comparable with other jobs, we need to dial back the job security to match. If you aren’t creating value, or the school’s administration simply doesn’t want or need you around, time to go. There are challenges in dealing with the unions in this matter, but it can be accomplished.
How is it that we trust and encourage our bureaucrats to solve intricate problems like Middle East security, health care restructuring and financial regulation when they can’t deliver a decent education with one of the highest budgets around?