An interesting thought

Via Megan McArdle - I'm not for this, but it would solve the problem.

My lunatic proposal for the day: why not make it easier to move homeowners out of homes they can't afford? Set up a streamlined foreclosure proceeding where a current or mildly delinquent homeowner can simply give the house to the bank and walk away. Do this with two legal provisos:

1. No tax on the forgiven loan

2. No black mark on the credit record. The bank marks the loan as fully satisfied.

Of course, if we decide to actually "fix" the problem we should loosen immigration and get people actually in the vacant houses.

Line of the day

Via Megan McArdle "History may not repeat itself, but it stutters like hell."

Turning Japanese

We're officially in a recession - and for the first time in living memory American household debt shrinks! Americans really will do the right thing once all other options have been tried!

Another from MR

From Marginal Revolution comes this adage

It is through exchange that difference becomes a blessing, not a curse.

The post of the day

From Marginal Revolution

Thanks goodness we bailed out Bear Stearns back in March if we hadn't we might have lost Fannie Mae and Freddie Mac, Lehman Brothers, Merrill Lynch and who knows what else. Oh wait...

Sunday reading

• Cities and Ambition -

  "A friend who moved to Silicon Valley in the late 90s said the worst thing about living there was the low quality of the eavesdropping."

  I've always judged cities by the quality of the homeless and convenience stores, but there's all sorts of different metrics I suppose.
• What if politicians pandered to economists?
• The AJC now has foreclosure listings

John Robb's annoying moments

On the whole, I like John Robb, his book Brave New War was thought provoking, and his upcoming book on Resilient Communities looks to be good as well.

But then posts like this one anger me to no end. He goes over current world trends in apocolyptic tones and then closes with

Except for the fanatical optimists, market mystics (the divine invisible hand), and the naive/uninformed, the debates over these trends are over.

He always mentions the broad trends with no real mention of where economics might shift the current, instead he just brushes that off with the thesis (this is what I gather from reading him anyway) that practically all of the benevolent inputs are dynamic, whereas the benevolent inputs are static.

This is no ordinary Tuesday

My predictions are Obama and Huckabee here in GA. On a related note, I met my first Ron Paul door to door guy on Saturday, he seemed very nice. He gave me a bumper sticker too.

Before I go vote, here are some links that caught my eye:

• Barstool Economics
• Leading denominations by location
• Your tax dollars by at work - Atlanta cop and Duluth cop in shoot out
  

Quote of the moment

I was perusing Marginal Revolution (about vouchers) and came across this comment

In other words, even if a child’s chance of going to the state university is not increased by his new school, the kid’s chance of ending up in the state penitentiary is radically decreased. This consideration might not be of primary concern to many who support vouchers, but to those who live in the ghetto, it is of PRIMARY concern. Schools, more than anything, breed gangs. Like the projects of old, when you are FORCED to a geographical location, you make gang recruiting easier - and your kids chances of entering the prison system that much greater.

I saw a lecture by Nobel Laureate James Buchanan many years ago and before he veered off into pure math he said that there were three types of social organization, which he dubbed (something like this anyway), the closed circle, the open circle, and the broken circle. The closed circle is a prison, the open is free association, specifically where members have the right to exit and the right to exile rouge members and the broken circle, which is no association at all.

The Buchanan point came to mind...

Throwing stuff to the wall

Via Marginal Revolution, here comes today's quote of the day

Trying stuff is cheaper than deciding whether to try it. (Compare the cost of paying and feeding someone to do a few weeks of [Perl or PHP] hacking to the full cost of the meetings that went into a big company decision.) Don't overplan something. Just do it half-assed to start with, then throw more people at it to fix it if it works.

The market is a discover process after all.

Tuesday link roundup

• Advice from your public defender (best of Craig's List)
  
• Why we should hang out: a mathematical proof, this sounds like something I would do actually
• Interesting post on academic taboos from David Friedman
• Another blog post about Sarah Stever, from one of my realtors actually
• Ron Paul Facts, my favorite -

  Ron Paul has been shot at more than a dozen times, but the
  

  "pro- 2nd Amendment" bullets refuse to harm him.

The market has spoken

This editorial from the AJC is an annoying example of the current hysteria about subprime loans

Describing the wreckage of the subprime mortgage collapse as part of the normal business cycle is akin to characterizing the devastation of New Orleans as the aftermath of a seasonal downpour.

In both disasters, human blunders and government inattention played pivotal roles. And the market can no more be counted on to fix the subprime mess than Mother Nature could be trusted to fix up the mess after Hurricane Katrina.

Government must intervene quickly and firmly in the subprime fiasco, in helping desperate borrowers keep their homes if possible and, more important, in ending abusive lending practices that contributed to the national leap in mortgage defaults and foreclosures.

New federal and state laws must couple strong prohibitions against abusive lending with equally strong enforcement and consequences. The pain must be felt by the duplicitous mortgage brokers who talked the homeowners on Elm Street into loans with hidden brokerage fees and unnecessarily high interest rates all the way up to the investors on Wall Street who profited from the bundling and selling of these subprime loans.

The article then goes on to describe several cases of fraud that happened in the Atlanta area, fraud as everyone knows is already illegal. Foreclosure and the denial of credit IS the marketing working, mainly in stopping people from buying homes they can't afford. Absent fraud, no one is forced into a mortgage, and everyone knows how much they'll be paying.

I suppose I'm more sensitive to this now (having just bought a house) than most times, but it's quite maddening.

Shock Doctrine reviews

This is a week or two late, but anyway, check out Tyler Cowen's review of Naomi Klein's Shock Doctrine. You should also read this interview with her and Alan Greenspan.

Klein is the current favorite of the anti-globalization left. If after reading the articles you feel like cursing the fire department for making your house all damp and soggy after a fire, then you understand her quite well.

This is funny

I forget how I came across this, but check out Why Marrying For Money is Never a Good Idea.

Tuesday night rapid fire

• Robert Kaplan on private military contractors
• John Robb on private military contractors - one thing he doesn't mention (and I don't think he has mentioned it before) is that there could be many, many problems with highly trained combat forces under no particular command, they would make quiet a crime crew. It's unlikely with the current stock of PMCs, but it might be with the next generation.
  
• Solar Power is becoming a vested interest
• For some reason validator callout extenders won't work with a custom validator with the standard Visual Studio code, but it works with this code.
• Nazi War Criminal was found in Metro Atlanta. Why must events like these be the only time Atlanta makes national news?
• Building a tree fort as an exercise in project management
• DNI on leaving Iraq
• A client of mine was in the AJC today, I did the Atlanta Arrangements site late last year.
• Secret Geek has a nice post on the Principles of Scale
• Tyler Cowen on income inequality. I wonder if anyone is actually worried about this. No one seems to be, but everyone thinks everyone else is scared stiff. One thing to bear in mind is that the bottom is fixed at zero
  

Economics for five year olds

Arnold Kling has a great post on explaining economic development to five year olds, with the hope that journalists understand it. The version he came up with was this

There are lots of people in the world who will give us things that we want, as long as we give them something they want in return. This is called trading. Some of the things we trade are hard to see--they are like nice thoughts. Other people keep thinking up nicer things to trade with us, and we keep thinking up nicer things to trade with them. We keep trading nicer and nicer things. Many years ago, people had not thought up all of these nice things, so they did not have as much to trade as we do. That is why people who lived back then were poor, and we are not.

Now if he'll only do one for deadweight loss.

A civics quiz

I got this from Megan McArdle, it's the Civic Literacy Quiz!

I scored 57 out of 60 correctly — 95.00 %!

How about y'all?

Greespan

Alan Greenspan impressed me on the Daily Show last night.

One minor thing, they ran out of time before Greenspan could fully respond to Jon Stewart's question of "Why do we favor investment over work?". The question was in response to the stock market jumping in response than a greater than expected prime rate cut. The question does demand a long answer, and the part Greenspan didn't have time to get to was

"The tax code is used to incentivize investment and work (a very approximate answer, it does that whether we want it to or not). The role of the Federal Reserve is to regulate the money supply and ensure that a dollar a year from now buys about as much as a dollar today."

Shock Doctrine

A well done piece of propaganda is Naomi Klein's Shock Doctrine, available on MySpace TV. It's another attempt to get everyone riled up about income disparity, which no one seems to mind. Unmentioned is the fact that it is an indie film, being released on a social networking site, and being given away. Hardly something that would happen in a poor society.

Maybe countries are in the Gap for a reason...

From the Economist Blog

Why would anyone with a robust sense of reality simply assume that each national jurisdiction contains the seeds of a viable economy? If we insist on thinking of development as a matter of national growth, we may well consign most of the bottom billion, and their children and their grandchildren, to unrelenting poverty trapped within their UN-recognised national prisons. Our real moral concern should not be the Central African Republic, but its unfortunate denizens. The best thing for their prospects may simply be to get out--to leave for a place where growth has already commenced. The West's many attempts to jumpstart growth where the world's poorest already reside has yet to work. So why does the international community insist on betting the poor's lives on the gamble that it will, finally, some day?

While development has worked in some places, South Korea and Taiwan come to mind, there is little compelling evidence that a society locked into antiquated social capital can shift to a modern one absent the destruction of the existing social capital. The shocks would be a significant war, or a tyrannical government (i.e. China) willing to uproot society.

Its food for thought anyway.