Some Sense Regarding the Housing Market

It is about time someone talks honestly about the economy. According to The Wall Street Journal, Mitt Romney commented about the housing market and foreclosure:

One is, don't try and stop the foreclosure process. Let it run its course and hit the bottom. Allow investors to buy homes, put renters in them, fix the homes up. Let it turn around and come back up. The Obama Administration has slow-walked the foreclosure processes that have long existed, and as a result we still have a foreclosure overhang.

Number two, the credit [that] was given to first time homebuyers was insufficient and inadequate to turn around the housing market. I think it was an ineffective idea. It was a little bit like the cash-for-clunkers program, throwing government money at something which was not market-oriented, did not staunch the decline in home values anymore than it encouraged the auto industry to take off.

The Journal went on to say:

How's that for refreshing? After five years of politicians trying without success to postpone disclosures and levitate the housing market, Mr. Romney dared to tell the truth. Parts of the U.S., including Nevada, still have too many homes, and that supply needs to be sold off and fixed up so the market can find a bottom before home prices can start to rise again. The faster that process proceeds, the faster the recovery will take hold.

While the personal plight of many individual Americans is heart-wrenching on the personal level, meddling in the housing markets is the sort of disastrous policy that helped push the economy to its current state. Why can so many correctly criticize the bailout of big banks, insurance companies, and auto manufacturers, but not realize a bailout of Main Street is just as dangerous? The government's expressed desire to "prop-up" or "boost" the ailing housing markets are simply other terms for "create a new bubble."

By distorting incentives the government encourages individuals and institutions to incorrectly calculate risk. Inevitably, this will lead to sub-optimal outcomes. As difficult as it may be to watch the nefarious outcome of poor risk management, it is sometimes better for all to simply do nothing. The government not only does not have the ability or resources to "help" everyone, but it creates awful drags on the economy, as current policies have demonstrated, and breed future problems when it foolishly tries to become a superhero.

The Hypocrisy of OWS

NRO's Jim Geraghty points out just a touch of irony that exists in Occupy Wall Street (OWS). OWS cannot seem to avoid the fact that the very things it is supposedly protesting against, are essential aspects of human nature and society—characteristics even OWS cannot escape from demonstrating.

[The full text is not available online since it is an email newsletter, NRO's Morning Jolt. I have included the it below.]

---

I'm just fed up with the greed of the rich and powerful, man, like those Occupy Wall Street organizers. The New York Post offers us a great belly laugh: "Even in Zuccotti Park, greed is good. Occupy Wall Street's Finance Committee has nearly $500,000 in the bank, and donations continue to pour in -- but its reluctance to share the wealth with other protesters is fraying tempers. Some drummers -- incensed they got no money to replace or safeguard their drums after a midnight vandal destroyed their instruments Wednesday -- are threatening to splinter off."

One occupier laments, "The other day, I took in $2,000. I kept $650 for my group, and gave the rest to Finance. Then I went to them with a request -- so many people need things, and they should not be going without basic comfort items -- and I was told to fill out paperwork. Paperwork! Are they the government now?"

You can hear the laughter at UrbanGrounds:

The obnoxious drummers are upset that their vandalized drums won't be replaced from the $500,000 in the general fund nor will they be getting funds for infrastructure (a shed) to keep them safe. The money collected is actually sitting in a bank, that's right a BANK! Isn't this motley crew opposed to banks AND capitalism? What bank and what is the name on the account? Is it an individual account or is it a corporate account? Is the person or group that the account belongs to registered and is making required filings? The Schadenfreude is strong in this one!

When the "Parasites On Parade" finally ends, and it will, some one or some small group is going to have a lot of "walking around" money, while the smelly masses who panhandled for it will be in the same sorry condition they were in before, blaming unknown individuals and corporations for all their troubles.

The Post also shares:

Filth-ridden Zuccotti Park is a breeding ground for bacterial infection loaded with potential health-code violations that pose a major risk to the public, an expert who inspected the area warned.

"It's like Walmart for rats,'' Wayne Yon, an expert on city health regulations, said yesterday.

"There's a lack of sanitation, a lack of controls for hot and cold water," Yon said. He saw at least 15 violations of the city's health code -- the type that would easily shut down a food establishment.

He noted the lack of lavatory facilities, as neighbors repeatedly complain about protesters defecating in the area and the stench of urine.

A.J. Strata wonders if the Occupy Wall Street crowd understands that they are inadvertent advertisements for why their vision of the world can't work:

So when I watch a tent city culture play government and cry for equality I see [it] for what it really is. Look at these people living in tents, calling one a kitchen and one a counsel center, fighting law enforcement while crime runs rampant amongst them. It's a sad joke!

What, am I supposed to trade in my upper middle class home I worked a life time to obtain, turn in my cars and motorcycle, give up all I have to go play communist commune in a park somewhere?

Are they nuts? Herman Cain wants to change the tax code and is getting nervous ninnies taking shots at him from all sides. These silly people in these occupy zones want to replace our entire society!

Good luck with that one.

Eat Local?

Here is an article that will make the elite "organic" crowd spew out their tofu in frustration. Foreign Policy writes how the "buy local" movement is horrible for the world's poor and not necessarily any better for the environment (or your health) than your standard internationally traded produce.

[T]hese First-World food fetishes are positively terrible for the world's poorest people. If you want to do the right thing, give up on locavorism and organics über alles and become a globally conscious grocery buyer. This should be the age of the "cosmovore" -- cosmopolitan consumers of the world's food.

The article goes on to discuss how genetically modified (GM) crops are not the horrible, unsafe perversion of nature that many on the left (and Europeans) make them out to be. While arguing they may not be a "panacea," the author correctly points to their possible current and future benefits.

Additionally, the article blows holes in the accepted wisdom that eating locally actually helps the environment. It states:

For example, it is twice as energy efficient for people in Britain to eat dairy products from New Zealand than from domestic producers. It is four times more energy efficient for them to eat lamb shipped from the other side of the world than it is to eat British lamb. That's because transporting the final product accounts for only a small part of the energy consumed in the production and delivery of food. It's far better to eat foods from places where production itself is more efficient. For example, New Zealand cattle eat clover from the fields while British livestock tend to rely on feed -- which itself is often imported.

The bottom line is that (global) trade is good. Economies of scale, which are often the result of international trade and improved technologies (GM crops), help both the environment and the poor—the latter by providing jobs and supplying cheaper food. Those that profess otherwise seem to widely out of step with their supposed enlightened aim of helping humanity. While anyone is certainly entitled to spend their personal money as they choose, they should at least be clear regarding their motivations and effects. The "eat local" and "organic" trends are a luxury that can be afforded in many Western countries; they are not noble solutions that positively address the global problems that many who live these lifestyles purportedly want to solve.

Occupy Wall Street: An Inflated Movement

Occupy Wall Street (OWS) is "inept, incoherent and hopelessly quixotic"—and this is from their gushing supporter Eugene Robinson, who goes on to offer effusive and saccharine praise. The media has been awash with such puerile punditry—half-baked attempts to turn this rabble into a meaningful cause. But the truth is that these characteristics—the disorganization, lack of coherence, lack of mission and purpose—that Robinson and his compatriots are trying to turn into redeeming qualities are precisely why OWS is asinine.

The basic problem with OWS is that they do not know what they are criticizing nor do they know what they want. Instead they just want to make some noise. They have descended on the streets to join a protest-cum-fiesta, with no agenda in mind. In other words, they are pointlessly trying to create turmoil (or just trying to be part of the "crowd").

There are two underlying tenets of leftist philosophy that are implicitly driving this movement to the streets. The first is the so-called "problem of the underdog" (alternatively the "David and Goliath complex"), where the underdog is automatically granted moral superiority while the "overdog" is castigated as evil, corrupt, abusive, and the like. In cases where there is no clear underdog, a battle of words and propaganda usually ensues to claim the mantle of the oppressed. This conceptualization of the world is generally a driving theme on America's left. The underdog is to be reflexively defended against the oppression of the overdog, without any consultation with facts, history, logic, or other essential inputs that often underlie rational behavior. Whether the powerful is white, male, American, Israeli, rich, or a business owner, they are rubber-stamped with moral opprobrium.

The incorrectness of this knee-jerk damnation should be self-evident. Certainly while those in power can be in the wrong, their identity does not automatically imply that such is the case. However, this unfortunately has become a guiding principle of the left and a motivator of OWS. The unwashed have flocked to Zuccotti Park, the "headquarters" of OWS in NYC, because of an innate bias against the supposed overdog. Wall Street, CEOs, and bankers have been pilloried simply because of their identity and their perceived positions of power. And while there was indisputable wrong-doing by some on Wall Street (just as there is indisputable wrong-doing by those in Washington and on Main Street, the latter unfortunately far too often ignored), the attack on the system shows a lack of understanding of Wall Street's purpose and how basic things, like economics and finance, work. Instead it shows the deeply rooted bias, endemic to leftist ideology, of anyone who is perceived as being "top dog."

Secondly, OWS is motivated by the romantic aura that the left drapes around social revolution and protest. Acts of civil disobedience are lauded simply because they are performed, generally regardless of the cause. Protest has become an end unto itself, the mission and message are secondary, if existent at all. In a sense, a segment of the left wants to "recapture" the spirit of the 1960s, a time when protest was successful, partially because there were causes to protest about (some justified, others less so). "The Occupy Wall Street movement is an exercise in nostalgia. It’s an attempt to recreate the excitement of 1968, when the world’s youth took to the barricades," says a blogger at The Telegraph. The hippie mentality is evident in the drum circles, tie-dye, and other throwbacks filling Zuccotti Park. OWS is not really protesting—they have nothing to protest about—they are throwing a party, living in a revolutionary dreamworld, and trying to recreate some romantic notion that never existed.

The movement, if it can be called that, has tried to link itself not only to the 1960s, but to the Arab Spring and even the Tea Party. But the truth is, it shares little in common with any of these movements. The key lacking feature is that OWS has no agenda. They have no demands nor do they offer any alternatives to the status quo. There is, in fact, nothing political about them. The Arab Spring has a clear agenda of removing the tyranny and dictatorship that has lorded over the various Arab nations for decades. They have a goal and can clearly define when part or all of that goal has been achieved. For all their problems, (and ANR has been critical of the Tea Party), the Tea Party has a clear platform and agenda. They propose and can judge legislation according to a set of principles.

OWS possesses none of this. Their vague discussion about "economic justice" is meaningless. They are grossly out of touch with any sort of philosophical underpinnings of their beliefs. There is no social or political argument to be found.

Charles Krauthammer has decisively described the condition of OWS.

To the villainy-of-the-rich theme emanating from Washington, a child is born: Occupy Wall Street. Starbucks-sipping, Levi’s-clad, iPhone-clutching protesters denounce corporate America even as they weep for Steve Jobs, corporate titan, billionaire eight times over.

These indignant indolents saddled with their $50,000 student loans and English degrees have decided that their lack of gainful employment is rooted in the malice of the millionaires on whose homes they are now marching — to the applause of Democrats suffering acute Tea Party envy and now salivating at the energy these big-government anarchists will presumably give their cause.

Except that the real Tea Party actually had a program — less government, less regulation, less taxation, less debt. What’s the Occupy Wall Street program? Eat the rich.

The sad thing is how much some circles want to turn OWS into something consequential. Whether for nostalgia, a romantic notion, political expediency (look at the unions and many Democratic politicians), or simply because anyone in a suit must be a bad guy, many are beating their drum-circle drums to create meaning out of this "protest." But OWS cannot go anywhere, certainly not in its current state. Instead it just disrupts and distracts, removing focus from the very real problems many Americans are facing. At worst, it may lead to wholesale violence and division, precisely what America does not need. America's economic woes are all of our faults—we should be coming together to find solutions, not playing rounds of "point the finger."

Israel's Terrible Blunder

Israel is usually pretty smart when it comes to security and mitigating the threats from terror. There is, however, one area where they repeatedly fail to maintain their vaunted standards: their willingness to negotiate for hostages. Israeli Prime Minister Benjamin Netanyahu announced on Tuesday that the Israelis had reached a deal with Hamas, the terrorist group and Gaza's governing regime, for the release of captured Israeli soldier Gilad Shalit. Shalit, who was abducted five years ago by Hamas agents, will be swapped for some 1,000 Hamas prisoners currently being held in Israeli prisons, many of whom are serving life sentences for terrorism.

The deal, however, is dreadfully foolish. By rewarding Hamas's kidnapping, the Israelis are only facilitating the re-occurrence of such heinous events. It is never wise to provide hostage-takers with incentives to continue their behavior. The payment of ransoms is a sure way to put future Israelis at risk. The only successful way to deter such behavior is to ensure that abductions will never be rewarded and that kidnappers can expect severe punishment for such transgressions.

Equally damning is the price that Israel has agreed to pay for the return of Shalit. It will now release scores of murderers and terrorists, many of whom are sworn to Israel's destruction. At least some of them will undoubtedly commit further terrorist attacks—in all likelihood causing the deaths of more Israelis. It is impossible for the Israeli government to morally justify the release of terrorists when death for some unfortunate Israelis is the inevitable outcome. Trading one captured prisoner for potential, even if undetermined, dead is unfathomable.

Finally, as harsh as it may seem, Israel will not be getting back the national hero that Shalit has been romanticized into over the past five years. As anyone who is familiar with Stockholm Syndrome knows, five years of isolation in a Hamas prison will not have worn well on the young Shalit, who was only 19 at the time of his capture. It is highly probable that Shalit has been completely brainwashed and indoctrinated by Hamas through years of psychological and physical control and torture. In all likelihood, over the course of his imprisonment, his handlers were able to break him. A worst case scenario is that he comes out of captivity as a mouthpiece for Hamas, slamming the very Israelis who sacrificed to gain his freedom. Obviously, such an outcome would be a huge propaganda win for Hamas and a demoralizing blow for Israel. Needless to say, it would only contribute to the mounting costs of this foolish prisoner swap. ^[1]

However misguided, the venerable roots of Israel's policy should not be denied. The intention is pure—to ensure that no solider is left behind, whether alive or dead. This is at least understandable, if not in some simplistic way commendable. It is undoubtedly comforting for the soldiers of such a small state to feel protected by their government. Nevertheless, while one's heart bleeds for the tragic Shalit, the government must consider the broader picture. There are better ways to maintain a commitment for the safe return of one's soldiers. Finding alternative means to punish Hamas, deter abductions, and obtain Shalit's release are the only method to fruitfully maintain Israeli security. Prisoner swaps will only lead to further tragedies and should never be a policy option.

---

Note:

[1] This is not meant to say that Israel should not do what it can to ensure Shalit's return—it should—but simply that the benefits the Israelis will get from a swap are not only most likely lower than they expect but certainly not worth the broader costs.

Redistributing GPA

University students in California put accepted liberal wisdom to the test in a well-executed video. Posing as petitioners, they asked bewildered classmates to sign a petition that would mandate redistribution of GPA points from those fortunate enough to have high GPAs to those with low GPAs—in order to bring everyone closer to the university median. Unsurprisingly, most students demurred, claiming it was unfair to take what they had worked hard to earn and give it to others. Regrettably, most were then unable to reconcile this belief with their contradictory support of a "tax-the-rich" mentality. Its quite sad how so many Americans, particularly our budding scholars, accept such arguments whole-cloth without thinking through the underlying reasons and implications.

The video is a few months old, but highly poignant given the equally obtuse rhetoric coming from the Occupy Wall Street movement.