Mark Calabria of CATO has a good post up about the SEC’s limp suggestions for improving the credit ratings system. As I’ve worried here before, no one is suggesting an end to the oligopoly of credit ratings agencies, or moves to attach less official weight to the ratings they produce:
The thrust of the SEC’s current approach is more disclosure, such as releasing “pre-ratings” that debt issuers may get before final issuance. Additional disclosure of ratings methodology and assumptions is likely to be useless. Almost all that information was available during the building housing bubble. The problem is that the rating agencies had little incentive to go beyond the consensus forecasts of increasing to at most modest declines in home prices. These same assumptions were the foundation of almost all government economic forecasting as well, yet few believe that forcing CBO or OMB to disclosure more of their forecasts will cure our budget imbalances. What is needed is a change in incentives.
Here again the SEC seems to misunderstand the incentives at work, but then recognizing such would force the SEC to admit its own role in creating those some perverse incentives. The SEC’s notion that agencies issue favorable ratings in order to gain business misses the most basic fact of the ratings business - they don’t have to compete for business, any debt issuer wanting to place “investment grade” debt has to use the agencies, and often has to use more than one of them. Due to a variety of SEC and bank regulations, there is almost no competition among the rating agencies.
The structure of this system pretty much guaruntees that CRAs will do a shabby job. The past few decades have proven that that is in fact what happens in practice. They are one of the most clear-cut bad actors in our recent crisis. But beacuse they didn’t directly cost anyone any money, and because any description of what is wrong with them is bound to be fairly dry and technical, there is no populist outrage directed toward them. So the system will remain in place. Sooner or later, they will agree to put a AAA rating on some new class of not-so-surefire debt. People who can convince their investors and regulators that this is meaningful will have a strong financial incentive to convince themselves as well. And we’ll all be worse off for it.
The next time someone tells you that - obviously! - the people in [insert middle-eastern country here] yearn for a liberal democracy with all the freedoms that we cherish here at home, point them in the direction of this law just passed in Ireland:
(1) A person who publishes or utters blasphemous matter shall be guilty of an offence and shall be liable upon conviction on indictment to a fine not exceeding €100,000. [Amended to €25,000]
(2) For the purposes of this section, a person publishes or utters blasphemous matter if (a) he or she publishes or utters matter that is grossly abusive or insulting in relation to matters held sacred by any religion, thereby causing outrage among a substantial number of the adherents of that religion, and (b) he or she intends, by the publication or utterance of the matter concerned, to cause such outrage.
Free speech as we know it simply isn’t important even to most of our closest allies, as I’ve mentioned before. This might make me a little nervous about visiting Ireland again. Certainly, I think it is a way in which the U.S. is just better than Ireland - no moral relativism here (though no moral realism either). But I don’t think we need to impose sanctions on the EU, either, let alone prepare for an invasion. People are nasty and wrong about things. Let them be. We’ve got our own problems.
Andy McCarthy has some incredible breaking news, in a post whose title is so long, it can only be included in a blockquote with the excerpt:
“Had [President Bush's Warrantless Surveillance Program" been in place before the [9/11] attacks, hijackers Khalid Almidhar and Nawaf Alhazmi almost certainly would have been identified and located.”
[Really. That's the title of his post. Punchy!]
Another Friday night, another dump by the Obama administration of a report underscoring the vital importance of President Bush’s post-9/11 national security tactics.
The above quote about Midhar and Hazmi and is from Gen. Michael Hayden, the former CIA director who was director of the NSA when that agency ran Bush’s “Terrorist Surveillance Program.” It is a bombshell mentioned in passing on page 31 of the 38-page report filed by five executive branch inspectors general (from DOJ, DOD, CIA, NSA, and the Office of the Director of National Intelligence) pursuant to Congress’s 2008 overhaul of FISA (the 1978 Foreign Intelligence Surveillance Act).
I’ll have more to say about the report this week, but it also contains some other interesting facts that the folks who drop these reports late on summer Fridays would rather you didn’t linger over.
Other interesting facts, eh? Other than what, exactly? Unverifiable counterfactual claims are, I do believe, generally referred to as ‘opinions’ not ‘facts’. But never mind. The fact that the former CIA chief would make such a claim is pretty mindblowing. Shame on the Obama administration for hiding this bombshell in a Friday news dump.
Wait, what? Hayden made this claim three years ago, in testimony to the US Senate, and it was widely reported on then? Really?
Shit, Andy McCarthy tricked me again. Sorry, my bad. He just sounds so reasonable all the time…
UPDATE: Presumably a coincidence, but it turns out this is a great time for security hawks to do some hand waving.
If your local Chrystler dealer is having a going-out-of-business sale, you’d better act fast - the sale could be off soon, an not because they’ve gone out of business. Back when we were giving billions of dollars to automakers, it was important for lawmakers to emphasize that the money came with the requirement that the corporations be downsized and otherwise restructured with an ever-hopeful eye toward some day becoming profitable. As part of that process, GM and Chrystler announced they were closing over 2,000 dealerships nationwide. Congress is now working to make it clear that cost-cutting was never meant to entail spending less money in the districts of Congressmen. A bill to keep the dealerships open now has 221 co-sponsors in the house, enough to pass. Jim Manzi has an excellent, though brief, analysis:
The practical effect would be to reverse or prevent the vast majority of dealer closings that were a key component of the auto restructuring plans. This seems only fair, as the dealers paid good money for these politicians.
Felix Salmon thinks the Senate will put a stop to the madness. Here’s hoping, though the Senate version of the bill already has 14 sponsors. That’s a far cry from 60, but it’s a depressing start. So, just who are these clowns? Some highlights:
Ted Kennedy. It’s extremely unlikely that Kennedy will ever vote on this. It is insane that legislators have to physically make it into the building to vote, without exception, but then again, it’s also insane that, knowing this, we continue to elect so many very old people. Why Kennedy thinks he needs to take a purely symbolic stand in support of a piece of graft that no disinterested party could possibly support is beyond me.
Ron Paul. There must be some nutty piece of reasoning that makes this move fit his ideology, but I confess I can’t figure it out. Perhaps all the recent government intervention in the economy has driven him (more) insane. Or maybe he’s just in it for loot with the rest of them.
Iowa and Minnesota. Five out of five Iowas Representatives, six out of eight from Minnesota, both Iowa Senators (including the bill’s principal sponsor), and Tom Harkin from Minnesota. Al Franken is late to the party, so we’ll see. Apparently these states are tired of being accused of ruining our farm policy, and want to prove they can screw up the economy in other ways too.
Other sponsors from both houses worth mentioning: Maxine Waters (natch), Barney Frank (chair of the relevant committee, big fan of getting paid), Frank Lucas (no, really, that’s his name), Adam Smith (ditto. I believe the kids call this sort of thing ‘ironic’. They should cut that out), John Murtha (always thinking up clever ways to remind me how much I dislike him), Mark Begich (where there’s graft, there are Alaskans), and, finally, John Kerry, who is too boring to be worth a pithy insult.
Sarah Palin doesn’t understand why people won’t accept her stated reasons for quitting at face value. Kevin Drum is somewhat sympathetic. Stanley Fish thinks the pundits searching for an angle are more dispicable than Palin herself. They are all way off the mark.
Human interaction would be pretty difficult if it weren’t the default assumption that most people were telling the truth most of the time. Most utterances are fairly trivial; we can generally assume that people aren’t lying to us about the weather, because even the slightest inclination toward honesty would be sufficient to outweigh any possible incentive to lie about such a thing.
Of course, it is customary to give people the benefit of the doubt even when they do have a tangible incentive to lie. Our attitudes toward lying and liars make even this a good bet under many circumstances. Since we tend not to associate with people who have proved to be dishonest in the best, our odds get better with time. And since people are generally rational enough to save their lies for situations in which they are unlikely to be found out, a ceteris paribus assumption of honesty works out fairly well.
If, however, we are concerned only with figuring out what is actually true about the world, and have no interest in common courtesy - as we shouldn’t in analyzing the public actions of political figures - there is no reason whatsoever to make this assumption. That a politician says that x is true when the stakes are high and the chance of being proven a liar are essentially zero (even if a scandal breaks, no one can prove she was lying about her motivation here) should barely count as prima facie evidence for the actual truth of x. When the politician in question is Sarah Palin you can drop the qualifiers: that Palin is quitting for the reasons she gave is no more likely than if she had said nothing at all. Which is to say, not very likely at all.
As always, a little David Hume is instructive:
It is, therefore, a just political maxim, that every man must be supposed a knave.
Every woman, too. And in Palin’s case, it isn’t just a supposition.
It is no secret that, when subjected to any pressure whatsoever, Sarah Palin loses the ability to speak English. But it’s not just her - she has surrounded herself with quasi-verbal lunatics, and even her lawyers are struggling with the basics of the English language. Think I’m exaggerating? Some excerpts from her legal team’s most recent release:
Just as power abhors a vacuum, modern journalism apparently abhors any type of due diligence and fact checking before scurrilous allegations are repeated as fact.
Contrary to the insinuation that as Mayor of Wasilla, Sarah Palin “personally” oversaw bidding, construction, funding and accounting for the project (and thus, the allegation goes, “embezzled” from the project), the truth is far more mundane, and publicly available: [There is a lot wrong with this, but it is only fair to point out that the British comma usage is consistent throughout, so perhaps this is merely a diplomatic gesture]
As Mayor, Governor Palin did appoint the committee, another fact readily verifiable, and she was publicly on record supporting the need for such a facility—as was most of Wasilla. [The outlet that is recording on the record statements from more than 4,000 residents of Wasilla needs to seriously reevaluate its priorities.]
In addition, Sarah Palin was then criticized by some of not showing enough interest in the
project.
As described by the City of Wasilla itself: [It's exciting to have a city talk to you, but peyote consumption and public relations work simply do not mix]
The Mayor of Wasilla, be it Sarah Palin, or her successor, did not handle the funds, or the materials, for this project. To thus suggest she “embezzled” is as false as it is impossible. [The first sentence is too deranged to think about. As to the second: your complaint is that people are suggesting she embezzled, which they couldn't do if such a suggestion were impossible.]
The deeds of trust are recordable public records. [Yikes.]
To the extent several websites, most notably liberal Alaska blogger Shannyn Moore, are now
claiming as “fact” that Governor Palin resigned because she is “under federal investigation” for
embezzlement or other criminal wrongdoing, we will be exploring legal options this week to
address such defamation. [It strikes me as unlikely that Alaska blogger Shannyn Moore is a website. On the other hand, this sentence clearly states that they will not be exploring legal options this week. There, I think, they have accidentally stumbled upon the truth at last.]
When John McCain’s selection of Sarah Palin was announced, there was only one sensible response: this is a joke and, barring a DGLB situation, this election is over. Of course, very few people actually responded this way. There are four reasons for this, three of which aren’t that interesting, namely:
There are, obviously, a lot of people who are insane, stupid, and approve of Palin’s rhetoric when they can understand it. Naturally, these people don’t recognize that running one of their own is a mistake - just about everyone thinks that doing what they themselves approve of is also, conveniently enough, a cunning and effective strategy. Over at the Daily Kos, a lot of people think running Michael Moore would be a stroke of political genius.
People too sane to approve of Palin but who wanted McCain to win had an obvious incentive to pretend the Empress had clothes, or at least to refrain from gawking at her.
A lot of liberals were desperate to find reasons to panic and despair at a time when empirical evidence was not on their side. For whatever reason, Democrats are like fans of an ill-fated sports franchise, always waiting for their guys to blow it so they can get back to grumbling.
As I said, none of these are interesting, because none of them explain why people are still debating Palin and various Palin activities. The problem is that people who think and write about politics can only agree about counterfactuals. No one will disagree with me now if I say that it’s a good thing Obama didn’t choose Jesse Jackson as his running mate, but if he had actually chosen Jackson, you’d start to see the argument that his hymie town rhetoric might help Obama’s problems in Appalachia.
Consensus is boring, and it’s more fun to be thought-provoking than it is to be right. But sometimes things happen that really aren’t that interesting or difficult to pin down. Sarah Palin is a crazy person and there is nothing fox-like about it. She is incapable of telling the truth. She is perpetually mired in scandal. All of this was clear within a few hours of her selection. Since then, there really hasn’t been anything interesting to add to that analysis.
If Mark Krikorian and the new conventional wisdom are right, and nominating one “Nuyorican” woman (who, as Jonah noted earlier, is not even properly the child of immigrants, as Puerto Ricans are citizens) is all it takes to allow the White House to delay indefinitely the messy, no-win issue of amnesty for 10 million illegal aliens, mostly of Hispanic origin, few of Princeton/Yale education — that is a strategy that should not be subjected to too much conservative scrutiny. Don’t look a gift horse in the mouth, as the saying goes. The less talented you think Sonia Sotomayor is, the easier a trade this should be.
If it works, the White House should consider other applications. Everyone suspects that President Obama has been fibbing about his sympathies in the gay-marriage debate (he supported it before he opposed it) because he understands the potential political fallout (not least among black voters) from advocating, or helping to advance, same-sex marriage. Gay activists are coming to suspect that they’ve been played, yet again, by a Democratic administration which they believed to be sympathetic. Can they be bought off with a SCOTUS appointment? Would the nominee have to be out? Perhaps a genuinely brilliant, prominent lesbian constitutional law scholar would be a reasonable sop. There is one on the short lists. For conservatives, of course, that is a dicier deal than the Sotomayor tradeoff — since a genuinely brilliant constitutional scholar might advance the left-wing agenda a little too effectively.
Did I say, “if it works”? We know this strategy works — at least with the rank and file. Case in point: President Obama regularly makes plain his disdain for Israel’s democratically elected leaders; his almost visceral desire to force Israel to bend to his vision of an accommodation with the Palestinians; and his clear indifference to Israel’s existential security from threats of nuclear annihilation. Yet large numbers of liberal American Jews, who in many respects are quite intelligent, continue to point to Rahm Emanuel and David Axelrod — two high-level political advisor/enforcers lacking in tenure or the ability to make law or interpret the constitution (not yet a redundant statement) — and smile about how much they love the president and believe that he loves them back.
My kingdom for a horse? My huge, game-changing cultural issue for a seat on the court? The Obama version of “triangulation”? Whatever.
How about that? An enthusiastic reception and the most flattering picture I’ve seen of her from the New York Post. Hometown love trumps ideology. Incidentally, you can count on seeing a headline reading ‘SOTOMAJORITY’ the first time she writes an important majority opinion. It’s not quite as obvious in advance as the ‘Exit Sandman‘ headline we’ll see in 2010, but it’s close.
The controversy over Sotomayor’s ‘wise Latina’ comments doesn’t, I think, have legs. It really is superficially offensive, pace the counter-outrage on the left, and I’m still not wild about it in context. At the very least, she could have been more careful with her words. But it’s pretty clear that she was referring to judgement on issues concerning women and minorities. She didn’t mean that a wise Latina will just be a better judge than a white man in general, though that is what she said. She will no doubt get grilled about this, but it won’t change the fact that she is a shoo-in.
All the griping about identity politics and affirmative action is ugly. It’s all well and good to argue against preferential treatment and lowered standards on the basis of race as a general practice, but if you really think Sotomayor is a mediocre talent who got the nod because she is hispanic, then clearly the part to focus on is that she is a mediocre talent. Your empirical evidence for this fact is what lead you to conclude that racial preferences are afoot, right? The theory about Obama’s motivations is really just a side show, not particularly germane to the discussion. Of course, it’s a lot easier to demonstrate that someone is a Latina than that she is incompetent. But laziness is no defense for racism.
You will hear a lot about how Sotomayor’s decisions are overturned at a high rate. Nate Silver points out that this is based on a very small sample, and that the sample actually shows the opposite. So you can put that in the straightforward lie file. The Volokh Conspiracy tries to plug Sotomayor into the results of a more rigorous statistical study, which shows her to be more or less in the middle of the pack. The methodology is murky at best, though. I doubt that there is any statistical shortcut here - if you want to figure out how smart and capable a judge is, you just have to read some of her opinions. Alternatively, you could acknowledge that she will be confirmed, for good or ill, and change the channel.
President Barack Obama announced his nominee to replace David Souter: Sonia Sotomayor. Jeffery Rosen wishes conservatives wouldn’t use his critical article about her from a few days ago as a source for criticism of her now. He won’t get his wish.
California’s highest court upheld Proposition 8, but maintained that existing same-sex marriages were still recognized.
