Can they get any stupider?

From Wall Street Journal….

The Treasury Department is considering a plan to revitalize the U.S. home market that would push down mortgage rates for home loans, according to people familiar with the matter.

The plan, which is in the development stage, would temporarily use the clout of mortgage giants Fannie Mae and Freddie Mac to encourage banks to lend at rates as low as 4.5%, more than a full percentage point lower than prevailing rates for a standard 30-year fixed-rate mortgage.

Government officials are under pressure to address falling housing prices and mounting foreclosures, which underpin the current financial crisis. Treasury has struggled for months to come up with a plan that would ease the strains on borrowers without appearing to bail out homeowners and lenders.

Why did they arbitrarily choose to make rates a full percentage point lower? As long as we are printing money, why don’t we drop rates all the way down to 1%? After all, its not like using low rates to encourage people to buy houses has ever caused problems in the entire history of the America. And housing prices always go up.

What's the Problem?

From the Washington Post….

The U.S. military expects to have 20,000 uniformed troops inside the United States by 2011 trained to help state and local officials respond to a nuclear terrorist attack or other domestic catastrophe, according to Pentagon officials.

All the usual suspects are up in arms about how this the end of American Freedom. I don’t have much sympathy for this line of argument. Many of those same people where complaining after 9/11 that there was not enough troop left in American to defend the homeland.

You want to worry about the end of your freedom, worry about SWAT teams that are increasingly being misused to make all sorts of arrests that should not be made using paramilitary tactics.

There are still lost cities in the world

From the Telegraph….

Archaeologists have discovered a lost city carved into the Andes Mountains by the mysterious Chachapoya tribe.

The settlement covers some 12 acres and is perched on a mountainside in the remote Jamalca district of Utcubamba province in the northern jungles of Peru’s Amazon.

The buildings found on the Pachallama peak are in remarkably good condition, estimated to be over 1,000 years old and comprised of the traditional round stone houses built by the Chachapoya, the ‘Cloud Forest People’.

I find it amazing (and cool) that people can still find lost cities by hacking through the jungle with machetes. Who would have thought that was possible outside of the movies?

There was no "gratuitous" support

From a interview with Gao Xiqing, president of the China Investment Corporation,

Americans are not sensitive in that regard. I mean, as a whole. The simple truth today is that your economy is built on the global economy. And it’s built on the support, the gratuitous support, of a lot of countries. So why don’t you come over and … I won’t say kowtow [with a laugh], but at least, be nice to the countries that lend you money.

Talk to the Chinese! Talk to the Middle Easterners! And pull your troops back! Take the troops back, demobilize many of the troops, so that you can save some money rather than spending $2 billion every day on them. And then tell your people that you need to save, and come out with a long-term, sustainable financial policy.

Everything this guy says in this interview has a lot of truth in it. Even the part quoted above has a lot of truth in it.

But “gratuitous support?” Give me a break. We all know why the Chinese lent the Americans so much money. It was a calculated policy to help their exporters. An insanely stupid policy perhaps. But calculated none the less.

They got what they paid for. History was put on hold for 8 years. Like the Great Wall of China, that was an impressive achievement. But I think it will look rather futile in the end.

Having said all that, the man’s complaint is basically valid. China has taken a lot of crap from ignorant people in the US who don’t realize how good they had it or how much of that was due to China’s intervention. The exercises of US power in Iraq and Afghanistan along with the attendant economic boom would have been impossible without China’s economic support.

However, doing the world a favor and getting hated for it is what being a superpower is all about. People are always going to see the downsides of a exercise of power by a another nation and they will never acknowledge the benefits. Just ask any American.

Edit: It should be noted that China is still shoveling money down the rat hole.

However, I think Brad Setser is overstating his case a bit. I think that when we finally get good data on the November and December we our going to find that China’s exports fell through the floor. That is going to put downward pressure on the Renminbi all by itself.

One notes that Russia has been running a current account surplus for a long time. During that period they followed China in trying to hold down the value of their currency. Now they are struggling to keep the Rubble from collapsing in value.

Having said that, it clear that China is still growing its reserves to some degree. The only question is by how much.

This is why Lashkar-e-Taiba is a problem

From the New Yorker….

Lashkar is a big organization with multiple arms and priorities and its leadership is undoubtedly divided over how much risk to take in pursuit of violent operations in India, particularly given the comfort and even wealth the group’s leaders enjoy from their unmolested activities inside Pakistan. If the boys in Mumbai had support from Lashkar, did the group’s leader, Hafez Saeed, who runs Jamat, know of the plan? If so, that would be a radical act that would likely mean the end of his charity’s tenuous legitimacy.

This type of absurdity is why Lashkar is such a problem. No one denies that Lashkar has been behind deaths of many people in India. In fact, it is part of their recruiting appeal.

So why is that it would take proof that they were behind the attacks on Mumbai to de-legitimacies the organization? Because it happened on TV? Because white people died in the attack?

The same thing could be said of Hezbollah. Someday they are going to kill a lot of people in the wrong country. But until they do, they have a sort of “legitimacy.” At least among the people who are not being killed.

Push My Buttons

Why on earth did I decide to make myself jeans? Here I am, having just completed bodice and skirt sloper that could be used to make me any skirt, shirt or dress I can dream up, and all I wanted to do was make pants. What is wrong with me?

Well, nothing is wrong with me. At least with my reasoning skills. The problem is that there are no jeans to be had, for love or money, that properly fit me. The non-stretch jeans have such a long rise they go up to my armpits; this is because I am very short waisted. The stretch jeans—besides the afore mentioned unforgivable sin of being stretchy—will have a perfectly fine rise for me in the front, but in the back do not cover near as much of my backside as I would like. And none of them give me enough room to maneuver and all of them are at least six inches too long, and most of them more than that.

So, jeans. Yes, I drafted my own pattern for jeans. Yes, it was a headache, a nightmare, exceedingly tedious at parts, but I drafted them and sewed them. They actually came out pretty good, although I can’t possibly make another pair without tweaking the pattern (partly for greater ease of construction, partly for continuing to improve the fit). It was enough of an effort that I don’t really feel like talking about that part just now. Suffice it to say, I made a perfectly acceptable pair of jeans; all that remained was to install the metal button.

The metal button. You know, it’s on all of your jeans. It’s the kind you pound in with a hammer—it has a nail part and a button part, and whence the two are joined together they shall never, ever separate, and all that. They’re sometimes referred to as “bachelor’s buttons”, because you don’t have to sew to install them. I ordered a hundred of them in bulk (for Pete’s sake, you didn’t think this was the only pair of jeans I was ever planning on sewing, did you?), from a small family owned store in California.

I, by the by, am in a completely different universe, because I live on the East Coast. In the North.

Which is why I spent as much getting the silly things sent to me as I did on actually buying the buttons themselves.

But never mind all that. The button, the button.

I am sufficiently experienced with Murphy enough to know one must at least do a test run, both for the button, and the button hole. It went shockingly smoothly, both the button and the buttonhole. Okay, the button might have been a bit crooked, but that was just because I was sufficiently experienced with hammers to be a little more generous than was needed on a pound-in button. But still. That’s what trial runs are all about.

So I repeat the process on the actual-factual pair of pants, except being a bit more gentle on the pounding end. It comes out very nice. Life is good.

I wear the pants.

Life is still good.

I put the pants through the washer.

Life decides it can’t be good all the time.

The button comes apart.

How can this be? You pound it together, and whence joined, it never, ever separates. Remember? Remember? REMBEMBER?!

I push the button back over the nail. It goes on very easy, and comes off just as easy. Perhaps I didn’t pound hard enough. I look at the nail. It is blunted now, so I certainly pounded it hard enough to start trying to come through the button part. I take the nail out of the pants, and send them through the dryer. Maybe it was just an odd fluke. When they are dry, I’ll try again.

Or maybe Murphy is out to get me again. I try it on my sample again. Just in case, I get out my “anvil” from when I set snaps. It is hard. It is metal. It is just the right shape for cradling the button head.

Pound, pound, pound.

Ah, there we go. Nice and snug. Now I will button it through my test buttonhole. . .

. . .ker-plink, plankety. The button falls off of the nail.

What on earth? I look at the button. I look at the nail. There are no teeth on the nail to grip anything. The only mechanism inside the button to grip anything appear to be going the wrong direction. I look at another one of my 100 buttons. They all look the same. What gives? Am I supposed to pound so hard the tip of the nail flattens out so much that it can’t come back up the hollow stem?

Much vigorous pounding later, on a brand new button, I’m pretty convinced that is not the answer. Despite the “anvil” there is now a little out-dent on the front of the button. The stem of the button has been squashed down along with the nail. And the button and nail still merrily separate.

I am confused. There where no instructions with the buttons, but how hard can it possibly be? I know I did this once before; my first test button stayed in fine. I turn my sample to examine how my first and only success that ever happened.

Ker-plink, ker-plankity. My first and only success turns into yet on more failure. What. . .what. . .what? This just does not make any sense.

I search online to see if maybe there are tales of “what to do when your jeans buttons refuse to be happily married” or “what to do when you can’t even figure out how to install a bachelor’s button, for Pete’s sake”, or “how to keep your jeans buttons from falling apart at inopportune moments” or “please tell me you can get these things to stay together with out using a blow-torch or a sledge hammer” or “CAN ANYONE GET THESE STUPID THINGS TO WORK?!” The closest thing I can find is people recommending you “pound them gently but firmly several times”, that the button is installed when it “can no longer turn within the button”, and that if the button stem bends that your “nail is too long” (or your fabric isn’t thick enough), and you can cut it a little shorter (ha, yeah). No one reports their buttons spontaneously falling apart like poorly constructed bridges.

I send an email to the company out in California, because maybe I am just denser than a fire brick and I am just seriously not getting something.

The very nice company sends me back an email very promptly, telling me to please call this number and ask for Roberto. You will need to have the style number handy.

I don’t have time to call before Thanksgiving, because I am making blueberry pies. (You must please remember that California being 3 hours before us, there is some inflexibility as to when I call.) I did want to wear my jeans on Thanksgiving.

I gently tap in a button on Thanksgiving morning.

It comes out with in 20 minutes.

I get annoyed and give it a few very annoyed whacks.

It stays in all day.

I put it through the wash.

It stays in.

Now I am in the horns of a dilemma. I can pretend that the first 5 buttons were all flukes and that my remaining buttons will all be saintly and co-operative, or I can call Roberto.

I do not want to call Roberto.

Because the facts that he lives in California, didn’t email me himself, and is named “Roberto” all strongly suggest that he may not even be able write English, and almost certainly speaks with a heavy accent.

Now, please do not misunderstand me. I do not have anything against heavy accents. I do not have anything against people who can’t write English. I do not have any problems with people with people who can’t speak English or write in any language.

The person who has the problem is me.

Because, you see, I talk very, very, veeerrrryy fast. My family, who has to put up with me all the time—they only listen to every other word, at best, and make up the rest. My friends, who don’t have to be around me all the time either just smile and nod and pretend I make sense or ask me to repeat myself. Slowly. With space between the words, please.

And these are the people who not only speak my language, but know me personally! And they usually already know what I’m going to say before I say it!

So I do not want to talk to Roberto. Because I already know what he will say. He will say “What? What? I cannot unduhstand you. You haf no hammuh?” In a heavy accent.

I try to get help from my brother. He verifies it looks like it doesn’t work. He pushes one together with his bare hands. Well, I think he used his chin, some, too. His chin is like an anvil. Or something. He keeps stopping part of the way through to see if it’s stuck yet, but it never is. When he gets to the part where he blunts the nail and it still doesn’t stick together, he labels them all as cruddy pieces of junk.

I dread phone calls in the best of circumstances, and this isn’t even that. I am about 99.9% certain that I will have an awful, contorted, humiliating conversation with Roberto, wherein I try to explain to him what I am doing, and how it isn’t working, while he tries to understand and be helpful, but mostly tells me to do exactly what I’m already doing, and assuring me that if I follow his instructions it will work. And then I will have 100 buttons that don’t work and the instructions that don’t work to go along. A cute matching set.

To make matters worse, one button is still in place. I don’t know that it will still be in place, but it opens up the horrifying possibility that even if Roberto was 5 minutes down the street and I brought the buttons over in person, Roberto could still do the exact same thing I’ve been doing, and it would stay in. At least, for 5 minutes, until I got home. Or for five hours, until I was out in the middle of shopping, and suddenly ker-plinkety-ker-plankety loosing my pants button.

But because I am a good little girl, and I like to think that some how I can’t actually predict how these things will go, I called. Today. At four o’clock over here and one o’clock over there.

The first person who answers the phone is a very pleasant, perfectly normal, maybe-he-is-just-five-minutes-down-the-street-even-though-his-address-is-California type person. I ask to speak to Roberto, as my email instructed me. I am very pleasantly transfered. And then a pleasant voice says, “Dis is Roberto,” with an accent so thick it would put the Great Wall in China to shame.

At some point, you have to decide whether life is a tragedy or a comedy. Somewhere between verifying that no, I was not looking for jeans buttons, I had already bought them from him, and they were not staying in, despite being pounded into mauled bits of metal and his wondering confusion of how this could possibly be, I decided it was a comedy.

“Hm, dis is ve-ey odd. No udder customehs complain of dis. Do you pound it on somesing hard?”

Yes, I pound it on something hard. Very hard and very hardily, I have pounded this thing on something very hard. Don’t worry, I didn’t phrase it like that to him. But I did go over all the facts of the case.

“Dis ve-ey strange. It should be just the easiest ting,” he says, greatly confused.

“I thought they would be,” I say, “That’s why I bought them!” We both laugh. We are both greatly confused.

“Vat ziti are you?”

“Excuse me?”

“Vat ziti are you?”

“I. . .um,” All I can think of is the pasta “Ziti”, but I am not it, and it doesn’t relate to jeans buttons. “I, ah, I don’t understand your question.”

“Vat. Ziti. Are. You.” he says, very clearly.

Long pause.

“Vat ziti are you; you know, are you Lozzanglis?” Ah, Los Angeles!

“No, no. What city am I in? I’m on the East Coast!!”

“Ah, dat is what I thought. . .” he trails off.

We discuss that it is a hard surface. We discuss how thick my fabric is, but he says it is not too thick.

“Well, I not know what to do, because you are over there and I am over here!” We laugh. Yes. Life would be so much simpler if I could walk down the street, and he could show me how to do it in, and it would stay in for all of five minutes.

He suggests I use pliers. He suggests I have my very strong brother who puts them together with his bare hands to try the pliers. Yes, try that and see how it works.

I am about ready to tell him he is out of his mind, pliers won’t fix the problem, but the fact of the matter is very clear. He can’t help me. Because it should be working; no one has ever had this problem before, and he is over there and I am over here. So I say okay. And he says if I have any problems, ask for Roberto, and hangs up.

So now what do I do? I know perfectly well it doesn’t matter if I use a hammer, pliers or my brothers bare hands; I currently have about a 20% chance of any of these buttons working. I could email the person who first responded to me, and say “Roberto no can help me, because this never happen to his other customers. The buttons will cannot stay together; please ship me better ones or give me my refund.” But I don’t think they have any different buttons that don’t work like these ones, and if they give me a refund, it’s still only half my money back, on account of how much I paid in shipping (metal buttons are heavy when you ship them clear across the continent). And if I claimed all 80% of them were defective, I would have to ship them back to prove it. Then I would be out my shipping money and my buttons. (I should be clear here that I am predicting what will happen; they have no stated policy on jeans buttons that don’t work. But I would like to note that so fare my predictions have been eerily accurate.)

I feel bad for Roberto, because he wasn’t able to help me, and I feel bad for me, because he wasn’t able to help me. I have a button on my pants, but I don’t know how long they will stay there, or if I will ever be able to install any of the remaining buttons. Everyone at the company tried very hard to be helpful, but no one on the other side of the universe can figure out why my jeans buttons hate me. It’s of no use to me to get more jeans buttons if they all want to fall off without even a half-way reasonable excuse.

Did you ever hear of pilots landing their planes with “a wing and a prayer”? I would like to give you something to ponder. You know the age-old question of how many angels can dance on the head of a pin? Well, now in your post-Thanksgiving jeans, how about you ponder how many angels are holding onto the button of your pants? Because apparently that what jeans buttons depend upon to stay put.

Good Point….

From Macro Man…

As always, however, large government actions carry unintended consequences. While lower long-term rates may be seen as a boon to spending, they also substantially increase the net present value of pension fund liabilities. Coming at a time when declining asset performance has left a hole in pension funds’ balance sheets, lower long term rates make the asset-liability mismatch even worse. Among those funds most adversely affected include, quelle surprise, the defined-benefit plans of the Big 3, who themselves are lobbying for fresh government bailouts.

This is even more true if the effect of all this money printing is inflationary.

Fire Up The Printing Press

From the Wall Street Journal….

As part of a renewed bid to win backing for a government bail out, GM requested a total of $18 billion in federal loans — $6 billion more than it said it would a few weeks ago — and added it needs an immediate injection of $4 billion to stay afloat until the end of the year.

The urgency of GM’s request stirred up new worries that GM may have to file for bankruptcy protection. In Detroit on Tuesday, top officials from the United Auto Workers union said at a meeting that GM could be forced into a Chapter 11 filing before Christmas if the auto maker fails to get government funding in the coming days, people familiar with the matter said Tuesday.

From the Associated Press…..

Gov. Arnold Schwarzenegger declared a fiscal emergency Monday and called lawmakers into a special session to address California’s $11.2 billion deficit.

The state’s revenue gap is expected to hit $28 billion over the next 19 months without bold action. The emergency declaration authorizes the governor and lawmakers to change the existing budget within the next 45 days.

Without quick action, the state is likely to run out of cash in February.

In a democracy, endless problems call for endless money.

The World Begins To Fall Apart

From the Belmont Club….

Thailand is an example of what happens when a society becomes divided to the point of paralysis and neither faction is willing to abide by the term of the other faction. W. Scott Thompson at the IHT argues that Thailand has always been vulnerable to a logjam but always had a monarch to clear it. Now the monarch can’t clear it and everyone is waiting to see what happens next.

We have not been following Thailand much lately. But they are in the process of falling apart.

Speaking of nations that are falling apart, Ukraine is going from bad to worse. As everyone knows, Ukraine is deeply divided between the pro EU western half of the country and the pro Russian eastern half of the country. Now a country that was almost ungovernable in the best of times is facing an economic crisis that would shake the foundations of well governed nation. This from the Economist….

Ukraine’s currency is plummeting in response to the country’s declining economic prospects and financing difficulties. With the IMF now having a major say in policy decisions, non-market solutions are improbable; instead, the aim is to achieve an orderly depreciation rather than a rout. Ultimately, a weaker exchange rate will be beneficial to the economy. Yet the adjustment will be painful, and this may fuel political impulses that run counter to IMF strictures.

And of course, there is always Pakistan.

As I have argued previously, you are going to see lot more of this as the economic crisis deepens.