Timmy's lips

How can you tell if Timothy Geithner is lying? His lips are moving. The treasury secretary has no credibility. He came to the office under two clouds: his income tax avoidance and the AIG bailout. Things have only gotten worse. In fact he may be the worse Treasury secretary since Hank Paulson. His utterances over the debt ceiling are embarrassing. He is asserting without challenge from the clueless news reporters that if the debt ceiling is not raised then the US will default on its obligations. Only a fool would say that and only a fool would believe it. Someone should ask him how a nation with a printing press could ever default on its obligations. The only consequence of not raising the debt ceiling is that the government cannot borrow to finance new spending. As I have noted before, the US takes in enough "revenues" to pay the interest on the existing debt and to actually run much of the government. Moreover, since the Fed is the largest debtholder, then just have the Fed practice forbearance and pay them later. Speaking of the Fed, there are those like Ron Paul who want to abolish the Fed and the gold bugs who want to go to a gold standard. While that is a truly bad idea that I will discuss fully later, the gold bugs say that on a gold standard you limit government spending and the Fed's ability to create money. Obviously they haven't heard of the Emperor Diocletian, whose Rome suffered hyperinflation under the gold standard by debasing the currency by adding lead to it. Nor do they realize that the Congress could just change the value of gold in terms of dollars which could be easily done. No, if you want to control the Fed's ability to create money, there is a far simpler solution, first you need to have 100 percent reserves. The way most money is created is through bank lending via fractional reserves. With 100 percent reserves the banks could not create money. Yes they could still lend but they would have to borrow the money just like nondepositories do today rather than lend from their excess reserves because there would be no excess reserves. Second, there has to be a law prohibiting the Fed from buying Treasuries directly from the US Treasury (re: Timothy Geithner). The fed could continue to buy treasuries that have already been issued and are in the portfolios of the public but they could no longer monetize the national debt. The buying directly form the Treasury as in QE and QE2 give money directly to the Treasury which immediately will spend it. The result is inflationary because the money is generated out of thin air. It you want to preserve the value of the dollar, if you want to combat the threat of inflation, if you want to slow down the unchecked rate of growth in government spending the answer is simple and clear. It is not the gold standard which will only enrich those friends of capitalism like George Soros, it is to constrain the Fed by enacting two rather simple changes in the law.

India Hicks?

In the Wall Street Journal's weekend edition for April 23-24 was an article entitled "India Hicks". I was expecting
1. seeing a woman in a sari smoking a corncob pipe
2. guys throwing huumus cans out of pickups
3. people ordering light bread pita sandwiches
4. elephants with "88" painted on their sides
5. Ravi Shankar-Dolly Parton Grand Ole Opry videos
6. trailer parks in New Delhi
7. reruns of the Mumbai Hillbillies
8. sales reports on white socks and Blue Ribbon beer in Bangalore
9. Jeff Foxworthy routines of "you might be a brown neck".
10. cobra handling
But no. It turned out to be an article on an interior designer of that name. To quote Ruth Buzzi "never mind".

What? No retraction?

Maybe you missed it but the Department of Transportation has released its findings on the Toyota unintended acceleration incident. Car and Driver in its June edition recants the controversy. You recall (no pun intended) that Toyotas were accused of defaults that caused unintended acceleration. The well publicized case was a Lexus ES350 fitted with mats for an RX that crashed in California resulting in four deaths. All of a sudden unintended acceleration cases increased from being almost nonexistent to over 7000. Toyota recalled millions of cars, go pilloried in the press, its chairman was humiliated before congress, and it lost sales and millions of dollars. In addition to the mats, other culprits emerged. It was the electronic throttle control, it was the brakes that induced the wild acceleration, or it was some other defect in the computers or electronics. Well DOT purchased six Camrys from owners who had filed unintended acceleration complaints and turned the cars over to NASA scientists. The rocket scientists did every test they could devise to induce unintended acceleration and could not do it. As a result, DOT concluded that the cause of the problem was "pedal misapplication." Translation: driver error. So where were the stories in the media - in the press and on TV? I don't recall (pun) seeing a single one. Toyota is owed an apology and should be compensated by the US government for all their costs. Don't hold your breath.

Birther

Donald Trump has quite loudly become the spokesman for the birthers – those who question whether the president is a native-born citizen. Personally the issue is a nonstarter for me. I could care less. The birthers come off as sore losers – saying “we could not beat you at the ballot box, we can’t impeach you so we get rid of you this way.” It is not enough that the president’s basic beliefs and policies should be the basis on which he is defeated, the birthers seek to delegitimize him as well. It is similar to the left constantly seeking to delegitimize the election of George Bush by claiming that Al Gore won in Florida – although no recount ever showed him leading.

What does the constitution say? The 14th Amendment defines citizenship as: "All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside." Title 8 of the U.S. Code specifically says the following and defines people who are "citizens of the United States at birth:" (see http://www.usconstitution.net/consttop_citi.html).
• Anyone born inside the United States (or a person subject to the jurisdiction of the United States)
• Any Indian or Eskimo born in the United States, provided being a citizen of the U.S. does not impair the person's status as a citizen of the tribe
• Any one born outside the United States, both of whose parents are citizens of the U.S., as long as one parent has lived in the U.S.
• Any one born outside the United States, if one parent is a citizen and lived in the U.S. for at least one year and the other parent is a U.S. national
• Any one born in a U.S. possession, if one parent is a citizen and lived in the U.S. for at least one year
• Any one found in the U.S. under the age of five, whose parentage cannot be determined, as long as proof of non-citizenship is not provided by age 21
• Any one born outside the United States, if one parent is an alien and as long as the other parent is a citizen of the U.S. who lived in the U.S. for at least five years (with military and diplomatic service included in this time)
• A final, historical condition: a person born before 5/24/1934 of an alien father and a U.S. citizen mother who has lived in the U.S.
Anyone falling into these categories is considered natural-born, and is eligible to run for President or Vice President. These provisions allow the children of military families to be considered natural-born. This is important for John McCain was born in the Canal Zone to a military family.

Note that the last provision would have made Obama a citizen at birth had he been born before May 24, 1934. The argument is that he was not born inside the United States or was not “subject to the jurisdiction of the United States.” But even if he were born outside the United States, what about the provision that even if one parent is an alien, his mother was a citizen and had lived in the country for at least five years? Why isn’t that sufficient?

Some have said that Obama must have something to hide because he can make all this go away by producing a birth certificate. My guess is that he wants the birthers to continue their ranting. It makes them look like kooks. As long as Trump trumpets the charge and the Republicans do not distance themselves from him, the real reasons for opposing this president get diminished.

Two peas in a pod

"My experiences at Princeton have made me far more aware of my 'blackness' than ever before. I have found that at Princeton, no matter how liberal and open-minded some of my white professors and classmates try to be toward me, I sometimes feel like a visitor on campus; as if I really don't belong."

"Regardless of the circumstances under which I interact with whites at Princeton, it often seems as if, to them, I will always be black first and a student second."

"And in my own life, in my own small way, I've tried to give back to this country that has given me so much. That's why I left a job at a law firm for a career in public service, working to empower young people to volunteer in their communities. Because I believe that each of us - no matter what our age or background or walk of life - each of us has something to contribute to the life of this nation."

"I stand here today at the crosscurrents of that history - knowing that my piece of the American dream is a blessing hard won by those who came before me."



These are noteworthy quotes from Michele Obama. Her experiences at Princeton come about because Princeton is dominated by liberals. No wonder she is resentful and like most blacks, even though she has experienced the hypocrisy of white liberalism, she, herself, is a liberal. I went to the University of Georgia entering as its first male black freshman. I found out quickly that many of the liberals tried to be my friend but often it proved false. What they were doing was demonstrating how liberal they were. They soon disappeared into their own little clique where they could tell each other how enlightened they were. Although I had liberal friends, the vast majority probably vote Republican today or are members of the Tea Party. They found that we had something in common or simply fell into a friendship that neither of us could explain. They gave up many of their white friends, suffered insults and lost roommates. Yet they were my friends even though some of them were not friends to each other. Poor Michele Obama. She should have gone to Ole Miss.

Maybe the liberals at Princeton are responsible for her warped view of contributing to society. She is saying that the contributions of those working in not-for-profits is somehow superior to those working in profit making enterprises. Nothing could be further from the truth. Profit making enterprises enable the not-for-profits to survive. Meeting consumer demands, innovating, entrepreneurship, risk taking, investing, economic growth are all vital parts of producing prosperity. A society is measured by how well off are its poorest quintile. In other countries that US quintile would be considered either middle class or better. If students took Michele Obama's advice we would all be worse off and poorer (not richer) for it.

Lastly, when she talks about standing at the crosscurrents of history knowing that "my piece of the American dream is a blessing hard won by those who came before me" I feel the same way although I suspect we are talking about two different things. She is likely talking about all those who sacrificed before and during the civil rights movement to force a sea change in American life. Read Taylor Branch's Parting the Waters and you too will be inspired by the bravery of Americans both black and white. However, when I say something similar, I am not just talking about coming "up from slavery". I am also talking about the sacrifices and bravery of my fellow Americans from George Washington, George Washington Carver and Booker T. Washington. Of Alexander Hamilton, Hamilton Holmes and Alex Haley. From Thomas Paine to Clarence Thomas. From John Wesley Powell to Colin Powell. To the black Americans who fought alongside whites in every war from Bunker Hill to Afghanistan. To all those American brothers and sisters of all colors, I give my deepest gratitude for indeed "my piece of the American dream is a blessing hard won by those who came before me".

My professor is a racist! I knew it!

I handed back an exam and was especially exasperated with my students. I had told them that there would be a mandatory question on the Fed goals of full employment, price stability, exchange rate stability and economic growth. They were to give the Fed a grade and tell how they would do things differently if they were Ben Bernanke. Fully 2/3s of them did not take the two minutes to look up the current numbers, the historic numbers and compare the two. So they lost between 6 - 10 points on a 10 point question. I told them that if I had as easy access to information when I was their age, I would have won the Nobel Prize in Economics by now. I also told them that information makes you seem smart. The example I gave was that the previous week I was in Raleigh for some meetings and was told that the head of the John Locke Society was added to my schedule and I would meet him after lunch. The only thing I recalled about Locke was that he opined that the mind was a blank tablet. By the meeting I knew that Locke was an abolitionist who also was a stockholder in the Royal Africa Company - they had the charter from the King to engage in the slave trade. I also found out that Locke had written the Constitution of the Carolinas. Was that why the society was headquartered in Raleigh? So when we met we had a lively conversation that caused all in the room to be impressed by my knowledge (newly acquired). Then, I asked the Locke person whose name was John Hood, “Please don’t tell me your middle name is Bell”. It wasn’t but we launched into a detailed discussion of something I know very well – the Civil War. We talked about Hood and his tactics that lead to grief at Franklin and at Nashville where he became the only general on either side to lose his entire army at battle. We disagreed over one point. He had accepted the common notion that Bell Hood was the south’s best division commander. I believe that honor went to Patrick Cleburne who Hood killed by having he lead the suicidal frontal assualt at Franklin. I then told my students that the irony was that the Union general George Thomas, the only Virginian of flag rank to stay north had a large contingent of black troops who undoubtedly took great pleasure in their work. I said, they were probably told by their officers “Don’t fire til you see the whites.” No one except the one student who is in his 40s chuckled. The rest had no clue to the reference. I am glad I am retiring.

Where oh where has all the good music gone?

I was driving to a meeting listening to satellite radio when a song by Lee Morgan came on. I know the band well (Jackie McLean, Hank Mobley, Cedar Walton, Paul Chambers and Billy Higgins) but did not know the song. I thought I had all his recordings. It was "The Double Up" on Charisma. I then realized that once upon a time I waited on the next LP from Miles, Monk, Coltrane, Lee Morgan and Hank Mobley. I even still have the first LP I bought when I was in the 9th grade (John Lewis "The Wonderful World of Jazz"). It is still one of my favorites. I know every note and all the personnel on all the hundreds of jazz LPs I own. But I realized I do not know the sidemen or the tunes much less the notes on any of the CDs I own unless they are a reissue of an LP. I also realize that the creative period of jazz is gone. Hardly any of today's players with the possible exception of Wynton Marsalis (although for my taste I prefer Roy Hargrove) will be a historic figure. Yet Marsalis is not the equal of Miles Davis, Lee Morgan, Dizzy Gillespie, Clifford Brown, Clark Terry, Kenny Dorham, Freddie Hubbard, Chet Baker, Donald Byrd, Woody Shaw, Nat Adderley, Blue Mitchell and others I could name from that era. The 50's and 60's were replete with them. I do not know other music - except for R & B and the Blues. My guess is that the same is true for rock, country, blue grass and all the others. Is it because of digital supplanting analog? I have CDs of old sessions with three or four or more alternative takes. They all sound good to me. But the song that made it onto the LP sounds great. Nowadays I guess recording is like word processing. They just cut, splice and remix rather than take the time and effort to do a complete retake. Just like the written word has suffered because of word processing, apparently music has suffered as well. In the olden days, I would put on an LP and listen. Today I listen to XM and Pandora. If some song makes me listen, I then go to Amazon or ITunes, sample the CD and download it. I seldom listen seriously anymore. Music has become just background noise. Music has now become a convenience. What I don't quite understand is how this has created a generation of disposable artists.