Two Thoughts on the Mortgage Meltdown: A Plague o' Both Your Houses

I won't for a moment pretend to have read everything written on the topic but here are a couple of thoughts on mortgage meltdown that i haven't seen elsewhere.

One: the banks are going ballistic hanging tough over the question whether they should rewrite some of these deals so that buyers can stay in their homes. They've pretty well sandbagged HAMP and they talk about a possible Chapter 13 writedown amendment as if it were the End of Western Civilization as we Know it.

What this loses sight of is the question of what will happen if the banks don't get writedowns. For borrowers, this is a huge issue, of course. Either they get to stay in their homes or they do not. For banks, I suspect it is not a big deal. The point is: they are never going to see this money anyway.

Consider the debtor with a $400,000 loan on property worth $280,000. He's out of work and can't pay. He walks away, leaving a deficiency claim of $120,000. What then? In a nonrecourse state, the bank eats it as a matter of law: the bank is debarred from pursuing the debtor for the shortfall.

In a recourse state, the bank can sue the debtor for the shortfall, but I suspect in most cases it won't be worth the bother. The debtor either (a) goes bankrupt and discharges the shortfall claim; or (b) does not go bankrupt and just limps along judgdment-proof, i.e., with no assets to play the game.

The point is that in all three cases, the bank is no worse off than if it took a modification. Indeed I can think of only one way that modification changes things and that is it may allow the bank to get more. How can this be? The answer is that if it plays its cards right, the bank may be able to position the debtor where he is obliged (and willing) to pay a bit more than the bare minimum--in our case, say $290,000. If these are the right numbers, than the bank is better off taking a carefully-done rewrite than otherwise.

That's point one. Now onto point two. We hear a steady drumbeat of argument that the debtors ought to get relief because the subprime fandango was full of "massive fraud." Correct, the subprime fandango was full of massive fraud, but look as little closer. From what I hear, the main fraud claim is that the banks (or brokers for banks) structured deals based on grotesquely inflated estimates of the borrowers' ability to pay--faked data about income and employment,l for example. Sounds like fraud to me, but who is defrauded here? Maybe the buyers of this caca, who took it on the bank's recommendations. Maybe the shareholders, entering into the delusion that their agents the managers were spinning straw into gold and thus deserved massive bonuses.

But the borrower? Maybe he was lied to--e.g., when he was told that it was perfectly all right to declare his income at eight times its actual number. Yet for the life of me I can't understand why a grownup loose on the streets could be misled into believing that he could pay, say, a $3,600 monthly mortgage payment from his takehome down at the car wash. 

Sure, there are cases and cases. That's why we have courts and lawyers (and that is why, inter alia, it is so bogus for the banks to say that they ought to be able to foreclose without paperwork). I might add that I'd feel differently if we were dealing with people 26 years into a 30-year mortgage who got whipsawed by some unseen society-wide calamity. But people take chances; it is okay with me that they take chances, but if you take chances, there is a chance that you will loses.

So, a plague o' both your houses.   I don't think the banks are ever going to get their money back on this one and I don't think they deserve to.  On the other hand, I'm not losing much sleep over debtors who so eagerly bought into such a lunatic fandango.

Update:  The Wichita Bureau, who is skeptical that workouts will succeed,  offers a constructive program for relief:

The banks might be better off with a deed in lieu and a short term – three year lease with option to purchase deal. So would the borrower. The house would stay off the market for a while; the borrower would pay the taxes and upkeep and the bank wouldn’t have to sell into a falling market (if the foreclosure mess didn’t kill the market; a lot of people are suggestion that too many short cuts were taken).

 Wichita adds:

This whole mess seems to be a fight over who is going to get stuck with the loss – the borrower (unlikely), the bank or the investor who bought the asset backed security (which means the government). I’m betting the government eats it.

 Sounds right to me.

The Wichita BureauOn the McCain Real Estate Bailout

Wichita recycles an old favorite:

The efficiency of the post oiffice. The compassion of the IRS.

Wichita offers assorted additional insights on the proposal no one seems to love:

Aside from the tax consequences to the debtor (here comes the IRS to take away the house for nonpayment of taxes on debt forgiveness income), how would it work?

We could assign FEMA to do it –

Anyone who had to deal with the former federal farm agencies in trying to negotiate debt settlements has some clue as to how hard that is.

First they would have to write about a million regulations.

Then (or perhaps while writing the regs) they’d have to staff up (although that may be the easy part; going to be a lot of realtors, brokers and bankers looking for work).

Then they would have to send everyone to some educational seminars.

Then they could start negotiating.

Meantime, there is no incentive to the borrower to insure or maintain the house, pay the taxes and try to make payments.

The efficiency of FEMA, the compassion of the IRS and the practical good sense of a rock.

I know – make it a rehab effort and farm it out to the prison system. Going to have a lot of brokers and folks with the right backgrounds in prison.side from the tax consequences to the debtor (here comes the IRS to take away the house for nonpayment of taxes on debt forgiveness income), how would it work?

We could assign FEMA to do it –

Anyone who had to deal with the former federal farm agencies in trying to negotiate debt settlements has some clue as to how hard that is.

First they would have to write about a million regulations.

Then (or perhaps while writing the regs) they’d have to staff up (although that may be the easy part; going to be a lot of realtors, brokers and bankers looking for work).

Then they would have to send everyone to some educational seminars.

Then they could start negotiating.

Meantime, there is no incentive to the borrower to insure or maintain the house, pay the taxes and try to make payments.

The efficiency of FEMA, the compassion of the IRS and the practical good sense of a rock.

I know – make it a rehab effort and farm it out to the prison system. Going to have a lot of brokers and folks with the right backgrounds in prison.

The Wichita Bureau on the 99 Percent

UB's Wichita Bureau is no fan of the one percent, but he directs his attention elsewhere:

When is the lower 99 going to figure out that we've been screwed by the 'greatest generation' - which having survived the war seems to have decided it was entitled to life time care - and proceeded to vote it. Aren't most of our real problems - public pensions, social security and Medicare (including long term care) - a result of the greatest voting themselves (and now the Boomers) a great retirement? I have only one friend who is willing to admit that he will take a cut in his pension to help out the fiscal problems - my brother (Retired CSRS annuitant) is adamant that he won't give up anything - he earned that pension.

I agree with a lot of this (and both Wichita and I are, of course, in different ways riders of this great wave).  But I can think of complications.   One, recall that the first pension train wreck involved not public pensions but private--or more precisely, "public company," as distinct from "sovereign." Indeed, I suspect one reason so many non-enjoyers are so shirty about sovereign pensions today is they saw their own (or their parents') dreams immolated in the notorious round of defined-benefit failures back in the 80s and 90s.  Two: whatever Wichita's brother may think, it ain't gonna happen.  Lots of public pensions are nominally a "fund"--a trove  of securities assembled as part of the the compensation package over a career.  Few or none of these funds are really solvent.  Degrees of solvency my run from "more or less, okay, maybe" down to "man the lifeboats!"  (Illinois).  Many/most also have a backup put option from the sovereign, but when time comes to honor the put the sovereign will find a way to say "no."  In counting pension largesse, I'd say we ought to mark to market.  On that standard, the greatest generation is not quite so great after all.  

Red Counties: More on How the Poor Live

Dining with my old pal Ignoto the other night (salmon carpaccio, gnocchi, scallops, a nice pinot), I listened to Ignoto remark that most of our friends don't have a clue how many poor there are, and how they live.

Leaden (preemptive) irony intended.  One may well ask how Ignoto knows, if he knows.  But if you talked with him for half an hour you'd recognize that he harbors a highly original and independent turn of mind, coupled with almost limitless curiosity.  So you'd be inclined to bet that he probably is onto something. And who knows, he may have seen the map that Ezra Klein finds "terrifying."  And he may have heard followup comments like these below.  First, the Wichita Bureau updates on life in the trackless void that is Western Kansas:

KS counties in red are mostly what you’d expect – the odd part is NW Ks – where the main industry is I 70 (hotels, fleecing hunters and the only Starbucks in that corner of KS; we stayed in a motel out there on the way back from a trip to Denver – and each room has a sign warning against cleaning pheasants in the bathroom sink – they point out that there is a special area behind the motel for THAT). There are three little towns out there that are holding their own – but apparently not in healthcare. The two red counties in SE KS are quite familiar: Greenwood where we had a second home for years and Elk, the poorest county in the state, supposedly. Both are dominated by big land owners – ranchers and oil guys. the Koch family owns at least 5000 acres of prime grass land. I suspect they own the commission. Greenwood has a small county hospital (that mainly packages people up for the helicopter ride to Wichita) with a decent number of doctors – mostly DO’s and foreigners. There is absolutely no industry – and damn few restaurants. About the only significant employers are the county, school system and a cluster of nursing homes supported by Medaire/Kancare.  . ...

Kansas continues to lose population in a majority of counties. In some cases, if the current exodus continues, they will be down to negative population by 2020 (link).

From the stats (link), the influx of Hispanics is done. But a couple of counties (in blue) are now majority minority – More Hispanics and Somalis than Swedes.

He might have added that Western Kansas has a long history of standing at or near the top of the league tables for farm subsidies, though last time I looked, an awful lot of the checks went to post boxes in San Francisco.  Meanwhile, here's an update on Wisconsin from UB's newly appointed stringer in Eau Claire:

That strip of red counties up through the center of Wisconsin is entierly predictable: these counties all lie between, what  I call, the highways. There are three major, north/south highways in WI - 41 on the east runs up through the Fox River Valley, Appleton, Green Bay, etc.; highway 51 (I-39) runs up through the middle of the state, Stevens Point, Wausau, Minocqua, etc.; and highway 53 on the west, LaCrosse to Eau Claire to Rice Lake to Superior. The most conservative and no-growing part of the state (the actual most conservative part of the state is the Fox Valley to Lake Michigan on the east side--Joe McCarthy country--lies between Eau Claire and Wausau (Highways 51 and 53)). Lots of Bubbas and gun nuts, and yes, Amish - not the greatest farm land either. There is just lots of swamp, scrub timber, brush and such. ...These people just won't change, so their kids grow up and leave; they go to LaCrosse, Madison, Eau Claire, and the Fox Valley. By the way, Green Bay is a mess - lots of poverty (lots of Hispanics, Hmongs, etc.), but it is growing-- the "two-class" society.

Followup: I guess what intrigues me most in the red map is that strip of blue counties across Central California and the Rio Grande Vallley.  Just guessing but it seems to me that it must be evidence that Chicanas, i.e., women, punch above their grade when it comes to health care--that they are healthier, better taken care of (take better care of themselves?) than you might guess from income data alone.

Long Live Securitization

Yves Smith reports that "sercuritization is dead" (link). Boy, I hope not. Or more precisely: if Blaming "securitization" for the recent mess is like blaming "options" for the various meltdowns in the 90s--or like blaming airplanes for air crashes. Yes, it happened on their watch, but securitizations don't kill people, people k-- but you've heard that one before.

I can see at least two aspects of the current mess that came out of the securitization model but neither one, I think, is part of the essence. One: loan brokers with money-in-front compensation. Not only did the brokers have no incentive to police the loan apps, they had a powerful incentive not to police them, so they could take the money and run. Same problem caused the looniest of the deals in the M&A boom of the late 80s, early 90s. The Wichita bureau says it also explains a good deal of the farm credit meltdown in the midwest in the 80s. And neither of these was particularly linked to securitization.

The other was the "who owns the problem?" problem. Or rather, the problem that nobody owns the problem. The important difference in the old days was not so much the way the loan was made, but what happened to it afterwards. The loan officer signed off on the loan. If it went sour he still had to face his colleagues and his boss. Sometimes he had to clean up his own mess, which was probably not such a hot idea because he had too much emotional investment. Sometimes you sent it off to "special procedures" tucked away on the 12th floor of the Acme building in a seedy neighborhood on the other side of town. But either way, someone had the responsibility of picking up the pieces.

But this model has been evolving away for a long while. Oldtimers will remember Penn Square, the canary in the mineshaft of 1980 bank failures--the one that almost brought down Chicago's Continental Bank (here's a refresher). Best way I could tell at the time, it seemed like the managers at Continental had taken some 28-year-old MBA into the vault with a shovel and instructed her to empty it out by closing time (maybe I embroider a bit, but that's a side issue). One assumes that this particular loan officer had long since been bonused and promoted before anything particularly fecal ever came close to the fan. If I am anywhere near right, then this is a problem, but not a problem of securitization; it is a problem involving failure of management and internal control.

By the way while I am at it, will everyone please stop talking about the mortgage meltdown as a "black swan event?" A "black swan" is not just something big and unpleasant; it is something unexpected in the sense of being unquantifiable (link). Anybody who paid the least bit of attention to mortgage markets over the last few years saw this one coming a long time ago.

More on Where the Doctors Are

The Wichita Bureau offers some intriguing comments on that chart of where the doctors are:

I think the stats are somewhat misleading in the map: “Office” may mean more than one doctor – and a lot of the big city specialists fly out to rural areas for monthly consults with specialized need patients. Lawrence is probably over doctored – it is one of the few places in Ks with pretty easy access and a good ER (which ends up providing a lot of medical care for the students – free).  ...  There are great swatches of the western part of the state that are practically unpopulated. Not only are there no doctors or dentists (there is no dental school here in KS) but there are NO LAWYERS. Of course much of the population in western KS is either elderly or Hispanic. And most of the health care is falling on the local hospital – if there is one. One thing the GOP hasn’t figured out here is that by paying low wages and no benefits, most of the big farm operations are pushing the health care for their often illegal employees off on their neighbors.

 Also:

I wonder how they count the Mayo Clinic? It’s “one office” in Rochester – but there are something like 800 doctors (and fellows?) who see patients there. Rochester probably has more doctors per population (and more hotel beds) than any similar sized city (100K) – but there are a lot of clinics modeled on the Mayo method of seeing patients (Hint: it’s like the carwash). ...

One interesting note: when Greensburg KS got hit by the F5 tornado five years ago, it pretty well leveled the place: HS, hospital, courthouse (jail) and most of the businesses. The population dropped by 50%: the elderly residents who were living out their golden years in the tiny town took their insurance money and moved near their families. The county seat functions, the school and the hospital were rebuilt (in green tech) – and they cleared out the only tourist attraction in town, the world’s largest hand dug well. But there ain’t much left. I suspect the doctors are still there – but specialized care requires a trek to Wichita.

 World,s largest hand-dug well, bleah.  He's got a point re multiple offices.  Shasta County CA gets an A on the "doctors" chart; nearby Butte gets only a B plus. But Butte has a big medical center while Shasta is a recreation spot.  Big offices in Butte, solos in Shasta?

The Affirmative Action Baby: A Different Take

I've been chatting with my friend the Wichita bureau over the puzzle of why Barak Obama has turned out to be such a mediocre President.  This blog post is the result although I should make clear that I haven't shown it to my colleague, and the opinions expressed herein are my own.

Be clear this is not a post about "born in Kenya" or "hates America" or "coming for your guns."  I'll certify that I think Obama is a decent man, even a smart man.  I hear that he masters his brief and that is comfortable making decisions (an underappreciated skill, I think, ironically rare in executive ranks).  I voted for him twice and  I'm pretty sure (particularly giving the indescribably awful competition) do the same thing over if I had to do it again.   It isn't even disappointment at Obama's centrism.    I know that everybody is a secondary source to himself after a while but I like to think that I knew he wasn't nearly the liberal that his enthusiasts took him to be.  I guess I am a bit surprised at his authoritarianism on the matter of spying and the phenomenon of demonizing journalists but for the moment, I think that's neither here nor there.

No: the question now is the matter of competence and in particular, how come Obama is so awful at the task of "leadership," understood here to mean the task of defining the issues and cajoling the troops to follow him--the characteristic, in other words, that made both Franklin D. Roosevelt and Ronald Reagan so remarkable.  

Again, I like to think I saw this coming, though I can't honestly say I foresaw anything like its current dimensions.   Still, I had heard in particular about his career as president of the Harvard Law Review--the most important post, as his critics acidly recall--that he had ever held before.  I wasn't there but the story has been told.  Way I understand it, the board was riven between conservative and liberal factions who distrusted--all right, cordially hated--one another.  Obama presented himself as--well, no as the "compromise" candidate, but as a good presentable face forward, who could maintain an image of solidarity at the review while perhaps holding the contending factions somewhat at bay.

That can be an important role and if I am reading the scene right, then I'd have to say he played it well. But for his future career, it's a role that doesn't require him actually to do much of anything, except to stay cool and work to keep the temperature down.

All this may be old stuff. But now I'd like to expand the horizon.   Looking at Obama's pre-Harvard life here, isn't it possible to speculate that there might be a pattern here?  Don't we have a guy who is, first, pretty bright; second, likable (at least on the surface); and third, cool to the point of remote?  The kind of guy who, in short, is likely to get helped on his way up the ladder, even though he isn't really required to do anything?

I admit, in an effort to preempt criticism, that what I'm talking about here is a kind of affirmative action. But not what you might think.  I'm not thinking "stupid kid gets a break that should have gone to a smart white guy." I guess  I am thinking "smart, likable kid gets a helping hand without ever having to do very much."   And note that  don't mean to complain about any "unfairness" in the process--except possibly the unfairness to him insofar as it brings him up the escalator without ever realizing that hasn't really been seasoned.

One way to see this process at work is to consider the way Obama has presented himself persistently in times of crisis.  He certainly doesn't put your package in the top drawer, like Lyndon Johnson.  He doesn't try to mock or deride even to undercut his adversaries.   What he does do is to remind us that he's serious about good government, that he's thought hard about the issue, that he isn't influenced by base or unworthy pressures, and he more or less assumes (ha!) that his adversaries are doing the same thing.

I think you'd have to concede by now that this posture hasn't proven very effective.  More remarkable, in a world where appearances count for so much, it doesn't even seem very effective: think of how often Obama has taken a position which when you stop to think about it is perfectly reasonable but which, as presented, comes across as earnest, ineffectual, just naive.

Only one other point: I guess I'm also surprised that he doesn't seem to have learned from the experience. Some people grow into the job; some shrink.  Obama seems to have stayed pretty much the same. They say the Presidency is, or becomes, a prison. I certainly don't envy him the next three years (I didn't envy him the past five either, but let that be).   He's going to be miserable a lot and certainly won't all be his fault.  I do wish he could develop a bit of the grit and guile I suggest here, and which has been so lacking in his performance up to now.

Ths Just in: World Going to Hell

I'm a big Kevin Drum fan--and Charles Murray gets up my nose--but for once I think  Murray has the better of it (link). Kevin, I was there, and he is right: we have slid downhill since the 60s.   More people are disconnected, with no real stake in the community. One in eight of us is on food stamps (one in four of children) (link) Fifty-one percent of us pay no income tax (link). And don't misunderstand, I'm not having a Michele moment here: I do not resent these folks but I do think we're seeing a society seriously out of whack.

Here's another point Kevin didn't discuss: the rich and even the well off are finding more and more ways to insulate themselves from the common ruck.   Anecdote: 1963, I was a fledgling newspaper reporter and word got out that the town's leading auto dealer was double-selling his receivables. It fell to me to find him and confront him.  I took my little aqua-blue Renault Dauphine out to his snooty east end stomping ground; I found the circular driveway in front of his columned (no kidding) mansion.  About 645 am I pulled up and parked by his front door.

Sure enough, about 20 minutes later,  he popped out and hustled down the grand front stairway, Tony-Soprano-like in his terrycloth bathrobe, steam exuding from each ear.  Short of it is he harangued and berated me for 20 minutes or so. When I had enough of his bluster to satisfy the city desk, I climbed back into my sewing-machine-powered sardine can and drove away.

Point is, aside from the comic absurdity of it all, these days I wouldn't have got close. A security guard would have stopped me at the project gate. Had I somehow slipped through, once he saw me from the window, he would have called the neighborhood contract cop who would have physically removed me and sent me on my way (probably without a savage beating, but still with nothing to satisfy the gents on the desk).  I--and so much of the detritus of humanity, would just not be his problem.

Here's another take from Underbelly's Wichita bureau--another old guy, albeit actually ten years younger than me:

  We recently were in Minnesota while I toured the Mayo Clinic – (unfortunately they don’t have much of a cure for advancing age). I grew up in Rochester and it was about a quarter the size of the current city. ...  I was appalled at how visibly and aggressively religious the city had become. Not surprisingly, there was a substantial Arab presence – with at least one mosque. And there were at least three Jewish centers – one for the Chabad group. Those make sense due to the people seeking medical care at the clinic. But there were  many  religious schools for kids and lots of ‘Pray for ______’ signs. And more churches than ever. It was depressing. 

 "Oh," adds Wichita, "and big box stores – many many big box stores."  Copy all that, but speaking as a longtime pagan, I have to acknowledge a certain ambivalence on the religious thing.  One the one hand, I'm as offput as you can be by the resentment and rancor that seems to pass for religion in so many quarters--not to mention the intrusiveness.  On the other hand, I acknowledge that there is all sorts of evidence that the sincerely religious are far more likely to be plugged into the world than us heretics.   Oy, young folks nowadays.  Complicated world.   

Do I File This as "Markets in Everything"? Or "Arbitrage Opportunity"?

The Wichita bureau is amused by a WSJ story on fare-dodgers on the Scandinavian subways. Their solution: they insure, and the insurance.  Evidently it is actuarially sound--premiums match payouts.  Then as any Econ 1A student could tell you (yes?)--let F=Fine; let p=probability of getting caught; let D=premiums at the insurance scheme. Then if the aggregate F*p is less than D, it all adds up. Norwegian scofflaws complain that the fare is too high but of course this is incomplete. You could just as well raise F or p and bring on the traffic police.

[Minor annoyance: I can't figure out how to use the "less than" symbol in text; Blogger wants it to be an HTML tag.]

The Wichita bureau notes a second transport angle that I (and others?) had missed:

Odd that the Republicans aren't targeting the Amtrak subsidies as outrageous support for rich democrats in a part of the country they've all but abandoned.

He's right on that, yes? Is this because K street lobbyists take a lot of Amtrak?

Nov. 22, 1963

Where was I?   I was trying to stay awake at a meeting of the Kentucky League of Cities on the second floor (mezzanine?) of the hotel at Fifth and Walnut in Louisville, the one that is now the Kentucky Towers.  I suppose I was trying to think of something, anything  to take back to my editor at The Louisville Times to justify my presence at so anodyne an event.  Anyway, my problem was shortly solved:  some guy came in and said something on the order of "Gentlemen, I have important news..."

I'm hazy on the next few hours.  I was in front of a TV set somehwere--maybe the same hotel--when I heard Walter Cronkite bring us all the final pronouncement.*  I do remember running into Marlowe Cook, the County Judge/Executive (and mentor of Mitch McConnell) at the corner of Fourth and Walnut, where Marlowe fulminated for a bit about the times and the people.  It was clear from the way he talked that he took it for granted that the killer was some right-wing nut and I for my part never troubled to doubt him; neither he nor I ever mentioned the encounter again.

Life was going well for me that fall.  We had lost our first baby but the next one was alive and well and a another was on the way.  I had finally, somewhat belatedly--I was 27--finished my BA and had started my first semester of night law school, and was loving every minute of it: after some false starts, the gears were beginning to mesh.  That night, perhaps in a daze, I drifted off to my property class where I found a good many of my classmates, probably in the same impaired state.  Our professor--heaven knows what was in his mind--conducted business as usual.  After a break, we reassembled for torts; Jim Merritt came in and announced "I don't know why we are all here tonight, but I'm going home."  Then it dawned on us--or at least, me--that there were probably better things to do than to recite torts.

Afterthought: I shouldn't be too hard on our benumbed property teacher.  Years later, on 9/11, I faced the same kind of choice.  I was due to meet my corp fin students at 9am, 2-2.5 hours after the crashes.  Most student showed up.  I said: look, I can do this either way, we can stay or go.  What is your preference?  Nobody went to the door, so we went about our business usual.

*The Wichita bureau adds an curious footnote: the gazillion replays of the Cronkite announcement--they all look clearer on modern TV sets than they did at the time.  Is there some way they could have tweaked the original picture (uh oh, that sounds lie conspiracy talk)?

Feeding the Google

The Wichita Bureau is intrigued by a Howard Kurtz piece about how Google is driving news production--everything you write these days has to generate Google hits.  Me, the part I like best is a quote from David Carr at the NYT where he says that it has changed the way people write headlines:  you used to go for cute, now you go for the words that will catch the search wave.

I'm sure he's write but he is talking about  guilty secret that headline writers have known about for a long time--headlines admired by other copy readers are not those favored by readers.  The copyreaders' choices are lmost always too elegant, abstruse, or cute. In this respect, I suspect that copyreading is not that-all different from other forms of intellectual production.  Example: the "literary artists" admired by the cognoscenti are rarely the ones admired by casual readers.  Think of names like John Barth, John Hawkes, Gilbert Sorrentino: names still uttered in hushed tones around the academy, yet nobody actually reads them.  I suspect you could make the same sort of analysis of music and art.  Yet also among upmarket novelists, you can sometimes sense a trend that they're trying--like copyreaders--to figure out a way to chase the market: think Haruki Murakami.

Meanwhile Wichita recalls the old insight that the three most popular book topics are/were "Lincoln," "Doctors" and "Dogs."  So a book named "Lincoln's Doctor's Dog" ought to be a smash.

At Wichita's suggestion I Googled "Tiger Palin Koran" (though not in parentheses).  Got only a lousy 880,000 hits.

And FWIW, I assume the headline on this piece is precisely not what the marketers want.

Update  here's a piece on Palin word-searches, including the "r" word.   A Google Search for "Hawkes Sorrentino Barth" gets a lousy 51,800.  Here's a piece about Hawkes and Barth with the not-very-reassuring title "Ironie ist pflicht."

Outsourced: On Obama, Huckabee, etc.

The Wichita bureau does my thinking for me this morning:

Obama remains too green. Dowd makes the point that he really didn’t see the Clinton high-low block coming. He’s too thin skinned. If we need an official visionary, he’s our guy. If we need a tough decision maker with the right connections, it’s Hillary. She brings her own biases and pent up grudges but she ain’t thin skinned. Brittle perhaps.

And if Bill doesn’t really love her, he sure can fake the anger. Pick on my wife, you $%&!. Where’s my horsewhip. Or better still, cane him on the street. (Old Washington custom, caning.)

Yes, that gets it nicely. A defining moment for me was when he snubbed Hillary at the State of the Union. What do you think this is buddy, a junior prom? You'll need to deal with that woman when she is majority leader in the Senate.

Wichita also weighs in on my current fascination, the Huckster:

I think that McCain would make a serious if not fatal error in picking Huckabee as VP. I might be able to vote for McCain if the spare were acceptable; Huckabee is not. He represents a minority in the Republican party and the machine in Washington would eat him. Or simply let him loose on some of his silly issues (evolution, the poor) and make the decisions some where else. He alone of the field does not seem to have the connections to put together a team of experts to run the government.

Well put again. I guess what continues to fascinate me about Huckabee is that genuine likeability, coupled with gobsmacking ignorance. He charms the birds off a tree and the next time you look, he's talking about adding lanes to I-95. Ironic that it leaves me rooting for the one Republican for whom I have the most personal contempt--the one whose hair doesn't move in a high wind, but who has sufficient lack of prnciple that he might actually run a half-way decent government.

Dissent on Hayek

Underbelly's Wichita bureau (newly relocated in Lawrence) points to this instructive critique of Friedrich von Hayek (link), including (surprise!) warm words from Keynes and Orwell.

I came to scoff and stayed to pray on Hayek. I had a college teacher who made us read Road to Serfdom, well before it came into fashion. I was outraged; I knew that as a good liberal, I should it somewhere down around the Protocols of the Elders of Zionj or Mein Kampf. Even as I read it, I developed the uneasy sense that I was wrong. Over the years, I've come to recognize that Hayek has a lot to offer--though certainly not, I should add, the kind of near-worship that he garners from ideological free-marketers (many of whom, I suspect, haven't actually read him).

I remember being particularly impressed by the argument that a central planner cannot possibly know enough to do the planning job right--too much decentralized knowledge in too many out-of-the-way places. I'd say that in the Web 2.0 age, this has come to be pretty much an Article of Faith. Indeed these days, we turn the point around. In the Silicon Valley they quote Hewlitt (or is it Packard?) saying that "if Hewlitt Packard knew what its employees know, we'd be 10 times as rich as we are"--translated, the task of management is to recognize the skill and knowledge of its labor force, and to motivate them to share what they know.

I also appreciate the way Hayek insists; that he's not a conservative. Right enough; anybody that committed to dynamic change cannot possibly share common cause with the troglodytes.

Hayek was, of course, smashingly, crashingly wrong in suggesting that Atlee Socialism must inevitably lead to fascism. But I wouldn't hold this against him. The parade of economists who have made absurdly wrong predictions is long and, ironically, honorable: Malthus, Schumpeter, and yes, Marx. Funny how the ideologues always remember Marx's predictive errors, and ignore or forgive them in everybody else. The truth is we can learn from all of them, and the fact that they were crashingly wrong is quite beside the point.

I've always been intrigued by the friendship between Hayek and Michael Oakeshott--two people who, you might think at first blush, had little to offer each other. Oakeshott is, of course, the arch-foe of systematizers (and, not at all incidentally, one of the best polemicists in modern thought). Of course that makes him a foe of Marxism. But I believe he said (though I can't put my finger on it just now) that Hayek went a bit overboard in his fetishizing of the free market, too.

I suspect where Hayek founders is (surprise!) on a favorite theme here at Underbelly central: the idea that a "market" is no more "natural" than Chinese opera--they are both cultural artifacts constructed out of "natural" materials by paths and devices that we can only dimly comprehend. That's why Hayek failed to understand that Atlee's Britain, very far from being a form of proto-Stalinism, was in many ways one of the most benign governments in human history. But move it lock, stock and barrel to Julius Nyerere's Tanzania and you have a recipe for disaster. Who was it who said that no one has yet invented a system of government under which the Germans will not work, or the Poles will? Not Hayek, but don't hold it against him. He's worthy of serious attention, and a sympathetic critique (like the one in Dissent is the highest form of flattery.

The Bechdel Test

Don't ask me why but the Wichita bureau thinks I need to know about the Bechdel test.  I quote Wiki

The Bechdel test (/ˈbɛkdəl/ bek-dəl) asks whether a work of fiction features at least two women who talk to each other about something other than a man. Many contemporary works fail this test of gender bias. 

The test is named after the American cartoonist Alison Bechdel. In 1985, she had a character in her comic strip Dykes to Watch Out For voice the idea, which she attributed to a friend, Liz Wallace. The test was originally conceived for evaluating films, but has since been applied to other media. It is also known as theBechdel/Wallace test,^[1] the Bechdel rule,^[2] Bechdel's law,^[3] or the Mo Movie Measure.^[4]

Well he's right, and it's new to me, but I want to plug it into a larger matrix about women-talking-about-men-talking-about women and suchlike.  Example: so far as I recall, in Jane Austen, we never see a man outside the company of women.  For all the evidence, they may not even exist except when they show up to cause trouble or solve life's problems among the ladies.   Side note: FWIW, I like Sex and the City, too, even though on the Bechdel standard, that show seems to be a crashing failure.

But re Jane Austen--this is not a complaint.  I'm a huge Jane Austen fan and I suspect one reason she is so good is that she is careful not to write about what she doesn't know.  But it does move you on to the larger question: can men tell the truth about women? Can women tell the truth about men?  Or can they at best (as in Bechdel/Wallace) do no better than to tell the truth about what women think they know about men.

Can any male author tell the truth about women?  Well now I wouldn't know, would I? I'm tempted to say "Henry James," but the nearest I can come to evaluating him is to consider what women think of Henry James--and I suppose his rep in that quarter is pretty high.  I was about to say "James Joyce, channeling Molly Bloom"--but is Molly's voice that of a woman, or just a man trying to ventriloquize a woman?

Of course it cuts both ways.  Virginia Woolf doesn't have much to say about men but most of what she does say is laughable.   So also the Brontes (does anybody see either Heathcliff or Rochester as anything other than a girlish fantasy?).  Among serious novelists, perhaps the most interesting would be George Eliot: she does write a lot about men and a lot of it strikes me as shrewd and/or savagely funny. But here too, you have to wonder: are you getting a man's story, or merely the work of an (uncommonly insightful) woman on the outside looking in?

Update:  Oh, now I get it.  Sweden. Sure, should have seen that coming. Will they also movies on whether or not anything the ladies say about the men is true?

Why Didn't the Japanese Make Better Use of its Conquests?

The Wichita bureau has been thinking again:

I think it is pretty well established (or at least commonly believed) that Japan lost WWII because of logistics and the US’s industrial base was much bigger (and better mobilized). That got me to wondering: Japan had over run much of N. China from the 30s on and had been in much of Korea since 1905. It had a huge army still in Manchuria after the war ended.

It had lost a major battle with the Russians (led by Zhukov) in a Cannae like envelopment - a technique he used against the Germans. So it hadn’t pushed into Siberia or tried to take Vladivostok. They also controlled SE Asia (rubber, tin and some oil) and the Dutch East Indies (oil).

But it had a huge part of the most industrialized part of China. Why didn’t it wring more military equipment and stuff out of the Chinese? Were they so poorly organized? Were the Chinese keeping them so busy that they couldn’t build an industrial base? Didn’t they have the capital base to do it?

They fought the war with the equipment that they started with - and developed little new in the way of guns or planes. The army that Zhukov captured was largely equipped with old stuff - WWI era guns and little heavy stuff. And poorly clothed. (the victory on the eve of the German invasion made Zhukov's reputation with Stalin).

To which I respond:

Most interesting and I never gave it any thought before but I suspect has something to do with the fact that they were such bloody awful conquerors. They did everything they could to demean and alienate the new subject peoples. Lots of yellow faces were glad to see Japanese coming because they were not white faces. What they got was torture and humiliation. Like the Germans in Russia but entirely unlike the British (and before them, the French) in India--who built everything on co-opting the locals and collaborating with local elites. ... 

Possible second thought: Japanese war/social machine is steady and stable but moves extremely slowly. Slow to get in gear. And slow to get out: Japanese have been in trouble since 1990 but the machine keeps grinding as if there was nothing wrong

So, what are we missing?

Towns, Tank and Otherwise

Way back in the 50s I lived in a tank town in Central Ohio where I learned the full implications localism. Idling at the marble countertop in the drugstore at morning coffee break, someone was bound to tell you: "you know, when those Russkies drop the big one"--and then the speaker would fall inarticulate as he pointed into the air over his head and then the floor under his feet. Had he commanded the power of speech, he would have said "right here."

And he wasn't alone. I think Art Buchwald did a column in those days about how every town had its own un-American activities committee--so many of them that we were running out of Communists to investigate ("No! He's ours!" "No, we saw him first").

I thought of my old tank town this morning when I read about the City of Keene, NH, and how it is adding new meaning to the old label. Keene (last murder: 2003), thanks to the Homeland Security Administration, will soon be the proud owner of a $286,000 eight-passenger APV--proudly described by the mayor as a "tank." And as the sales manager for the seller says:

"I don't think there's any place in the country where you can say, 'That isn't a likely terrorist target,'" ... "How would you know? We don' t know what the terrorists are thinking."

If tank town was a target and if Keene stands in need of a tank, then you can't be surprised to learn that folks in Kansas feel the pressure to protect themselves as well. Here is a squib from what appears to be an authentic letter now circulating among the sunflowers:

First of all pray. Secondly, contact the senators listed below and ask them to vote to get the bill NO FOREIGN LAW out of committee so it can be voted on in legislature. Thirdly, pass this email on to others with your encouragement to do the same. The people of Kansas need to be informed.

There is quite an Islamic lobbyist group at work at the KS state Capitol. IN the past couple of years, they have wined and dined many legislators with trips to Turkey, etc. and they make their presence known on the hill. These people persevere with their agenda and are willing to wait patiently to see their agenda fulfilled. If you have any doubts about not wanting to have Sharia Law in KS, you need to do research on the topic and it will curl your hair.

 Two thoughts:

•  An Islamic lobby in Kansas?

• Kansas has a hill?

Research assistance: Wichita bureau.  

Roundabouts Again

Groupies will know that the staff and management here at Underbelly central are big fans of highway roundabouts.  They do take a bit of getting used to, but after a few hours days weeks  (whatever) of being chased around Southern England.  I came away a true believer, an acolyte, even a proselyte. We now even have a few roundabouts here in Palookaville--mostly in somewhat out of the way places, which suggests that the proponents were settling for what they could get--but the fact may have the unintended virtue of letting newbies practice their rounding skills in a low-stress environment. There is a new one near the center of town which seems to be trouble waiting to happen: there's a one-way street in just where you would most want to go out. But I grant that the deeper issue here may be a whole new traffic pattern, as if calculated to leave the whole town screeching and hollering on their way into the season of love and joy. We'll get used to it, and emerge better for the ordeal.

The Wichita Bureau, reporting from exile in nearby Lawrence, offers a more complicated account:

The city government ... is proposing to put in a ‘roundabout’ in a major street near here. Although they have been building them here for years, the locals (esp. the elderly) don’t adapt easily and entirely too many take the shortcut straight across. The intersection in question is in need of a light due to traffic levels but supposedly the roundabout would save money. At that point the local arts commission which has no money pipes up with a proposal to put a piece of art in the center.

I’m going to propose that they weld two Mercury Grand Marquis (or Lincoln Towncars) into a sculpture and put it in the roundabout. Here in the midwest, the aspiring elderly all drive Grand Marquis (or to show they made it) - and since they quit making the brand, they are getting a bit battered. They are a huge car – a throw back to the days of cheap gas – and welding two into a sculpture would be appropriate and also block the short cut.

The Party of Kick You When You're Down

[Update below.]

There's an old story about Charlie Lederer the writer, standing next to his Waspy/anti-semitic hostess, beside her highboy full of priceless China. "Admit it," said Charlie, "you don't really have a good reason for hating Jews, do you?" No, his hostess admitted, she really did not. Whereupon Charlie pushed over the highboy and said "now you do."

I have often wondered why I dislike Mitt Romney so much. Maybe now I know. But first, let me tell you a story about Dean Acheson and Alger Hiss.

I’ve lived long enough that I now believe—as I did not once believe—that Alger Hiss was indeed probably guilty of spying for the Soviets. But I remember few parts of the story more vividly than his relationship with Dean Acheson. Time Magazine recounts (link):

Hiss scarcely had time to post $10,000 bail and file an appeal before Secretary of State Dean Acheson set off the storm. At a crowded press conference in Washington, Acheson went to the defense of the former top State Department official whom a federal jury had convicted of perjury and thus found, guilty of stealing State documents to be sent to Russia.

"Whatever the outcome of any appeal which Mr. Hiss or his lawyer may take," said the Secretary of State. "I do not intend to turn my back on Alger Hiss."

By His Own Standards. Dean Acheson spoke in a voice weighted with emotion. "I think every person who has known Alger Hiss . . . has upon his conscience the very serious task of deciding what his attitude is and what his conduct should be," he said. "That must be done by each person in the light of his own standards and his own principles. For me, there is very little doubt about these standards or these principles. They were stated for us a very long time ago ... on the Mount of Olives."

In terms of sheer tactics, it was an epic blunder. Acheson met with near-universal denunciation, and established himself irrevocably in the pantheon of traitors. Less obviously, but no less truly, it established him as one who would not trade away his personal integrity for momentary political advantage.

Back to Mitt Romney. Today someone asked him what he thinks of his former Senate liaison, Larry Craig (link):

Once again, we’ve found people in Washington have not lived up to the level of respect and dignity that we would expect for somebody that gets elected to a position of high influence. Very disappointing. He’s no longer associated with my campaign, as you can imagine… I’m sorry to see that he has fallen short.

Shorter Mitt Romney: Larry who?

I used to wonder why I disliked Romney so much. I think I’m beginning to catch on.

Update: The Wichita bureau brings me current on news I had missed:

Romney's munchkins went back and altered previous information on his website to delete any reference to Craig being associated with the Romney campaign. ... Don’t know that they tried to edit him out of pictures, however.

Via a friend, Wichita adds:

The restroom in which [Craig] was arrested is outside security--so he had to leave and re-enter through security to make his connection (no pun intended) for Idaho.

Traffic Update

This just in, from the Lawrence (KS) Journal-World and News, via Underbelly's Wichita bureau (link). Nobody will ever convince this lady that she's wrong:

Unusual hearing follows traffic stop

By Mike Belt

September 1, 2007

Laura West claims the Kansas Highway Patrol trooper who stopped her “vessel” on the night of June 11 west of Lawrence had no right to arrest her.

She’s never had a driver’s license and doesn’t need one, West said as she represented herself Friday in Douglas County District Court.

“I was not operating a vehicle; I was exercising my right to travel,” West, 21, told Judge Robert Fairchild. “I was in a private vessel on a religious mission.”

West also said her vessel is her private dwelling.

West is charged with not having a driver’s license, improper vehicle registration, failure to dim headlights and obstructing the legal process, all misdemeanors. West was arrested and taken to the Douglas County Jail after it took 45 minutes to get her to step out of the van she was driving, Trooper Brady Flannigan said.

West was traveling with her partner, J.M. Sovereign: Godsent, and her 2-year-old daughter. West and Godsent, who testified as her only witness, said they were afraid of the trooper and his supervisor, who was called to the scene of the car stop at U.S. Highway 40 and the South Lawrence Trafficway. They made calls to 911 and claimed West was being kidnapped as she was arrested.

The couple, who were on their way to visit a friend in Lawrence when they were stopped, recorded the encounter with the troopers and submitted a CD of the recording to the judge.

According to Godsent and information he presented to reporters outside court, the couple belong to a group that claims the U.S. is not a country but a foreign corporation that has invaded America. They are concerned about implanted identification chips and say sovereign Americans are being forced to choose between God’s law and man’s law.

Godsent said the trooper was presented with a card after he stopped them. The card was labeled “Sovereign Civilian Police Observation Task Force.” By the trooper accepting the card he was accepting a contract to pay a $15,000 gold fee for each question he asked. Godsent said they will take the matter to court to get paid.

Meanwhile, West, who is free on $1,500 bond, will return to court Oct. 1, when Fairchild will announce his verdicts in the case. If found guilty, West could face fines and jail sentences. Fairchild wanted to make a decision on the case next week, but West wasn’t available then.

Why Do We "Insure" for Routine Meds?

Let's all agree that Rush Limbaugh is a vagrant little sac of pus (okay, one of those words is a lie).  Still the question remains--why do we pay an insurance company to cover routine medical expenses?  After all, you don't expect your auto insurer to pay for an oil change.  Aren't we just round-tripping money that we could perfectly well spend on our own?    I can think of four (maybe three and a half) possible reasons.

One--the most plausible in fact, I am sure--is because of taxes.  The employer gets to deduct medical; we don't pay tax on it.  A sensible employer ought to be willing to pay as much of our compensation as lawful in the form of medical insurance, and we ought to be glad to pay for the privilege (i.e., in the form of lower aggregate compensation).  So we try to cram everything we can into the "medical" pigeonhole.   Given the state of current tax law, this makes sense.  But it's a stupid law.

Two--quite apart from tax law, there is the point of motivating cost-effective behavior.  The medical insurer really doesn't want to pay out on, e.g., lung cancer losses for a pool of smokers.  So it makes economic sense for him to pay for, e.g., stop-smoking remedies, even classes.   I suppose we can imagine a world in which your right to catastrophic coverage is based on your showing that you met some cost-reducing preconditions.  But we know we would never stick to our guns on that one so we don't try.

Three--children.  We find a social interest in protecting against childhood, even prenatal, health issues, even if the parents don't want to.  We could try--we do try--to police the parents through the criminal law but it's an expensive blunt instrument, not all that effective in the best of worlds. So we go ahead and pay up.

Finally--group buying power.   Folks in our shop can buy a vision care package.   People talk about it as "insurance," but it's really nothing of the sort: it's just a group buying plan, with attendant economies of scale and buying clout.  Now, if only we had a national medical program, we could whip those gouging providers into line. Oh, right.

Note, I can think of a fifth possible factor in the debate, although I am not sure quite how far it counts a reason.  That is:  we think that medical care is just too damned expensive, and we've become habituated to having "somebody else" pay for it. 


Anecdote: the Wichita bureau reports on a relative--a schoolteacher--who has tolerated a lowish salary partly because the district is picking up so much of the meds.  Now, of course, the employer is trying to cut back on medical coverage, but they aren't offering to raise pay.  Seems to me if they are determined to make an absolute cut in compensation, it would hurt less to cut the taxable earnings first.