Blago blogging

blagoj The criminal troubles of an Illinois governor would not normally be one of this blog’s topics, but this Michael Barone op-ed on the Rod Blagojevich affair is just too good not to pass along.

Barone is well-versed in the complicated web of influences that define Chicago politics, so he is right in his element explaining Blagojevich to other pundits not so steeped in Chicagoland:

The answer, .   .   . is that [Blagojevich is] not crazy, but simply stupid, hugely stupid. I’ve long since come to the conclusion that Rod Blagojevich is clearly the stupidest governor in all of our 50 states, and he may be the stupidest governor I’ve had occasion to write about in the four decades when I’ve been co-author of The Almanac of American Politics. And a stupid man (or woman) in high political office can be very dangerous to all concerned. I have long said that as a political operative I would prefer a smart opponent to a stupid opponent. If you’re pretty smart yourself, you should be able to figure out what another pretty smart person will do. But whether you’re smart or stupid, it’s hard to figure out what a stupid person will do. That’s even more true when the stupid politician is your political ally. Stupid people do all sorts of things that are against their own interests. Like tell the press on Monday that you wouldn’t mind being taped, even when (as we learned on Tuesday) that you’ve been saying all kinds of things that you should have known could easily send you to the slammer.

Meanwhile, Joe Queenan compares Blago to Nero, and then wonders what we have come to when a governor of a big state can shake down Bank of America and nobody really notices:

The idea that the governor of a state as prosperous and important and sophisticated and upscale as Illinois would make this kind of threat is terrifying. Even more terrifying is that Bank of America saw no alternative but to give in. Yet even more terrifying is that nobody outside Chicago seems to have gotten terribly worked up about the situation, riveted as they are on the governor’s more theatrical transgressions. But peddling a Senate seat or using scare tactics to shake down a newspaper are nowhere near so serious a menace to society as letting the government arbitrarily intervene in financial transactions between banks and creditors. A crooked governor we can all handle. But a governor who capriciously decides which commercial enterprises a bank must finance and which it can ignore is a scary proposition indeed.

Rome wasn’t built in a day. But get the wrong politician in office, and you can burn it in a day.

Meanwhile, Patrick Fitzgerald, a prosecutor who is quite capable of pursuing a weak case that nevertheless puts him in the center of the media spotlight, ought to shut up about the Blagojevich case, says Victoria Toensing:

In the Dec. 9 press conference regarding the federal corruption charges against Gov. Blagojevich and his chief of staff, Mr. Fitzgerald violated the ethical requirement of the Justice Department guidelines that prior to trial a "prosecutor shall refrain from making extrajudicial comments that pose a serious and imminent threat of heightening public condemnation of the accused." The prosecutor is permitted to "inform the public of the nature and extent" of the charges. In the vernacular of all of us who practice criminal law, that means the prosecutor may not go "beyond the four corners" — the specific facts — in the complaint or indictment. He may also provide any other public-record information, the status of the case, the names of investigators, and request assistance. But he is not permitted to make the kind of inflammatory statements Mr. Fitzgerald made during his media appearance. [.  .  .]

Throughout the press conference about Gov. Blagojevich, Mr. Fitzgerald talked beyond the four corners of the complaint. He repeatedly characterized the conduct as "appalling." He opined that the governor "has taken us to a new low," while going on a "political corruption crime spree."

Of course, we know all about federal prosecutors violating such ethical duties down here in Houston.

Finally, the always insightful Larry Ribstein puts the Blagojevich affair in proper perspective:

Let’s keep that in mind before we hand over more regulatory power to politicians because we think we can trust them more than the market participants who would be regulated.

Would you buy a car from Congress?

bigthree The W$J’s Holman Jenkins continues what should be Pulitzer Prize-winning commentary on the problems of the U.S. auto industry:

None of [Congress’ complicity in the auto industry’s problem] was mentioned at four days of congressional bailout hearings, because Detroit knows better than to suggest Congress has a role in the industry’s problem.   .   . 

.   .   . The tragedy of GM and Ford is that, inside each, are perfectly viable businesses, albeit that have been slowly murdered over 30 years by CAFE. Both have decent global operations. At home, both have successful, profitable businesses selling pickups, SUVs and other larger vehicles to willing consumers, despite having to pay high UAW wages.

All this is dragged down by federal fuel-economy mandates that require them to lose tens of billions making small cars Americans don’t want in high-cost UAW factories. Understand something: Ford and GM in Europe successfully sell cars that are small but not cheap. Europeans are willing to pay top dollar for a refined small car that gets excellent mileage, because they face gasoline prices as high as $9. Americans are not Europeans. In the U.S., except during bouts of high gas prices or in the grip of a Prius fad, the small cars that American consumers buy aren’t bought for high mileage, but for low sticker prices. And the Big Three, with their high labor costs, cannot deliver as much value in a cheap car as the transplants can.

Under a law of politics, such truths were unmentionable in last week’s televised circus because legislators are unwilling to do anything about them. They won’t repeal CAFE because they fear the greens. They won’t repeal CAFE’s "two fleets" rule (which effectively requires the Big Three to make small cars in domestic factories) because they fear the UAW. They won’t hike gas prices because they fear voters. [.  .  .]

We hate to admit it, but the only good idea from the bailout debate is the proposal for a new "auto czar." Along with disposing of Chrysler and downsizing Ford and GM, his job should be to confront Congress with its own policy cowardice and failure. If saving gasoline and Detroit are both worthy goals, let’s ditch CAFE and institute a gasoline tax to make consumers value the cars government is forcing auto makers to build. If Congress doesn’t have the tummy for that, at least ditch the "two fleets" rule so Detroit can import small cars to meet the mandate.

Alas, Barack Obama’s vaunted "change" apparently doesn’t include spending the political capital to make Congress acknowledge the failure of CAFE. If he can’t do better than throw taxpayer money at a dismal policy disaster like our fuel-economy regulations (and so far he seems to be joining Congress in pretending it’s all Detroit’s fault), we might as well give up on his presidency along with any hope of progress on the nation’s other unresolved dilemmas.

His campaign never really answered the question of whether he was Chance the Gardener or Abraham Lincoln. We might as well find out now.

Frost/Nixon looks interesting

Rick Perlstein, author of Nixonland: The Rise of a President and the Fracturing of America (Scribner 2008), provides more insight into Nixon’s fascinating relationship with television.

Thoughts on the attacks in Mumbai

Remember — overcoming fascists of all stripes takes a fighting spirit.

Progress on the bailout front?

empty So, less than two months after this previous post noted that chapter 11 reorganizations with possible government financing of reorganization plans were the best tools to shake out the current financial crisis, even the NY Times (here and here) is promoting that approach for restructuring the Big Three automobile companies.

I guess that’s a sign of real progress.

Funny how the way we typically handle such things in the civil justice system usually is the most efficient solution to the problems.

It sure beats having this bunch fumble around looking for an alternative solution.

By the way, I’ve mentioned this before, but it merits passing along again. One of the best ways to keep up on developments in regard to the current financial crisis is to check in frequently on the following sites: Clusterstock, Dealbreaker, and Felix Salmon.

The blogosphere rules!

Thinking About Markets

Now that folks have had at least a bit of time to reflect on the financial crisis on Wall Street, some good historical perspectives are starting to pop up, such as this Niall Ferguson Vanity Fair piece. Toward the end, Ferguson makes an excellent point about market economies that is not widely understood:

The modern financial system is the product of centuries of economic evolution. Banks transformed money from metal coins into accounts, allowing ever larger aggregations of borrowing and lending. From the Renaissance on, government bonds introduced the securitization of streams of interest payments.

From the 17th century on, equity in corporations could be bought and sold in public stock markets. From the 18th century on, central banks slowly learned how to moderate or exacerbate the business cycle. From the 19th century on, insurance was supplemented by futures, the first derivatives. And from the 20th century on, households were encouraged by government to skew their portfolios in favor of real estate.

Economies that combined all these institutional innovations performed better over the long run than those that did not, because financial intermediation generally permits a more efficient allocation of resources than, say, feudalism or central planning. For this reason, it is not wholly surprising that the Western financial model tended to spread around the world, first in the guise of imperialism, then in the guise of globalization.

Yet money’s ascent has not been, and can never be, a smooth one. On the contrary, financial history is a roller-coaster ride of ups and downs, bubbles and busts, manias and panics, shocks and crashes. The excesses of the Age of Leverage—the deluge of paper money, the asset-price inflation, the explosion of consumer and bank debt, and the hypertrophic growth of derivatives—were bound sooner or later to produce a really big crisis.

In short, markets are imperfect and sometimes quite messy. But they have stood the test of time in proving more efficient than the alternatives. Don’t give up on them just yet.

The Obama choices

supreme_courtJan Greenburg sizes up the most likely chances that Obama will have to nominate justices to the U.S. Supreme Court.

The bottom line — despite the advanced age of several of the justices, perhaps not as many as one would think.

A stubbornly bad system

justice for sale So, now that the Democrats have swept in a slate of judges to replace many longstanding GOP state district judges in Houston, the Chronicle runs an article about how some Republicans are calling for an alternative system for appointing judges.

Not surprisingly, the Democrats are not as enthusiastic, at least right now.

Of course, while the Republican judges have been controlling the courthouse over most of the past two decades, they weren’t interested in rocking the boat to change the system, either.

However, the problem remains that, partisanship aside, doing nothing about the current Texas system of electing judges simply perpetuates a very bad system.

Thankfully, as Don Cruse reports, Chief Justice Wallace Jefferson of the Texas Supreme Court is showing leadership on the issue, just as the late John Hill and Tom Phillips did before him during their stints as Chief Justice.

But the potential for corruption in the Texas judicial election system perhaps best summed up by the following joke:

Taking his seat in his chambers, the judge faced the opposing lawyers.

"So," said the judge. "Each of you has presented me with a bribe."

Both lawyers squirmed uncomfortably.

"You, attorney Mohanty, gave me $50,000," observed the judge. "And you, attorney Venkat, gave
me $60,000."

The judge reached into his pocket, pulled out $10,000, and handed it to attorney Venkat.

"Now that I’ve returned $10,000 to attorney Venkat," exclaimed the judge proudly, "I’m going to
decide this case solely on its merits!"

Stossel’s Politically Incorrect Guide to Politics

If you didn’t have the opportunity to watch or record it last Friday, then watch the following six YouTube segments of John Stossel’s Politically Incorrect Guide to Politics when you have the time (the other five segments are below the break). The program is television at its best presenting and analyzing key issues involving government regulation of business and the impact of that regulation on the creation of jobs and wealth. Enjoy:

Continue reading

Security theater

tsa While considering the abject vacuity of the presidential candidates’ positions on the major issues this election season, I started thinking about some minor issues that might make a difference in my vote.

For example, if either major candidate came out in favor of dismantling the "security" apparatus that the federal government has foisted upon us to make airline travel an aggravation, at best, and an ordeal most of the time, then that candidate would probably get my vote.

Alas, neither candidate has proposed such a dismantling.

Nevertheless, don’t miss this clever-but-serious Jeffrey Goldberg/Atlantic.com article on the utter uselessness of the Transportation Safety Administration’s airport security procedures (prior post here).

Inasmuch as the only two airport-security measures that really matter — fortified cockpit doors and the awareness of the flying public as to what a hijacking can mean — have been in place virtually since the attacks of September 11, 2001, Goldberg zeroes in on the wasteful airport security process that we have allowed the TSA to impose on us at a substantial direct cost and an even greater indirect one.

Moreover, that process does virtually nothing to discourage serious terrorist threats. Rather, the inspection process is "security theater" that simply makes a few naive travelers feel safer about airline travel.

Finally, if all that weren’t bad enough, the worst news is that once a governmental "safeguard" such as the TSA apparatus is adopted, few politicians are interested in dismantling it even when it’s clear that process is ineffective, expensive and obtrusive.

That’s food for thought as we get ready to endure implementation of the next round of governmental regulation of business.