The Remarkable Century and the Future

I recently came to a rather obvious, yet remarkable insight. The 20th century was a truly unique and remarkable moment in human history. There is not a single aspect of human civilization that changed less during the 20th than in any of the centuries that came before. Population, economic output, life expectancies, oil consumption, meat consumption and international travel are just a few of the countless factors that changed more between 1900 and 2000 than in any other prior hundred years.

Expectations for the future are with few exceptions rooted in this period of explosive change. Some scholars have traced a variety of trends back into the more distant past, but these works are largely viewed as curiosities on the fringe of economic and social thought. For better or worse most of us are happy to assume the order of things that emerged after the Second World War will hold steady throughout ours and our children’s lives.

Economic growth has been both the great cause and great consequence of the recent pasts explosive change. By rapidly expanding the total available wealth, this expansion has allowed the general population to enjoy unheard of prosperity, without threatening the comfort of the elites.

Growth can be broken into two pieces; basically more people consuming more stuff. Population growth has obviously been the major driver of the first component of growth. From 1900 to 2000 the number of people on the planet rose nearly 4- fold to approximately 6 billion. Just as dramatic was the increase in the number people actively engaged in the globalized economy.

For all the wonders of the Pax-Britannica, world trade really only impacted a small percentage of humanity, in Europe North America and a handful of aristocrats scattered around the rest of the world. Today, only a small number of subsistence farmers are cut off from globalization.

If population growth were the primary driver of economic expansion, we would be living in Malthus’s world. The miracle of the 20th century was the dramatic rise in living standards that accompanied population growth. I don’t have time to recount all the ways in which living standards have improved since 1900. Look around you, the growth is obvious.

Is the 20th century repeatable? In 2100 will our heirs see 2000 through the same eyes that we see 1900? Our entire understanding of the future depends on the answer to this question. It is clear, that attempts to preserve the rate of growth for the next hundred years will smash into the physical limitations of the planet.

Technology is frequently cited as the magical solution to square this circle. Yet, there has never been a major innovation that has shrunk humanities lust for resources.

Adapting to a world of limited growth will be the profound challenge of the next hundred years. The impacts will be both positive and negative, but will shake the very core beliefs of society. This post is the first in a series that I will publish laying out the implications of a limited growth world on our expectations.

Flawed Market in College Football Scheduling

As a Badger football fan it’s pretty hard to get excited about Wofford this weekend. But it’s not hard to understand why the school schedules games like this. As this article from Sports Madison.com states, the extra home game is worth millions of dollars to the athletic department. Wofford does not expect the Wisconsin to make the return trip.

A simple change in market structure could net millions for the University and provide fans infinitely more excitement. Currently, the school charges the same price for every game. But as anyone who has every tried to buy a ticket from a scalper, not all games have equal value. Charging more for games against marquee opponents would give the school incentive to schedule tougher non-conference opponents.

http://host.madison.com/sports/college/football/article_a1f81f9a-a274-11de-b121-001cc4c002e0.html

Can Private Health Insurance Work?

Efforts to fix our health insurance system have found no found shortage of critical flaws in the “market”. I have yet to hear a coherent argument for the continued existence of private health insurance. Health care differs in three critical ways from traditional markets. Taken together I doubt that it is even conceivable for a private market to exist for health insurance.

In a true free market those who got sick and couldn’t afford care would be left to die or suffer the consequences of their conditions. This is a rational, yet morally abhorrent policy. Even the most die hard free marketers don’t advocate this. The unwillingness to condemn the poor to preventable death is the first significant obstacle to a functioning private health insurance market.

The second critical obstacle is the great variation in expected health care costs. Insurance markets are designed to protect individuals from significant deviations from expected costs. Consider auto insurance, every driver faces some risk or an accident, but few expect to total their car in a given year. By pooling risk, the small percentage of drivers that do suffer serious crashes can avoid financial ruin.

But this logic in no way applies to health insurance. Many people suffer conditions that have high known costs. If you are HIV positive or have Diabetes or are paraplegic medical costs are not an unexpected catastrophe, they are a known expense of life. Only the richest individuals can cover these costs out of pocket. Insurance can’t solve this problem only subsidies can.

Timing is the third critical difference between health insurance and traditional health markets. For insurance to function a claim must be tied to a specific instance. A fire, a car accident, a death are all discrete events that can be placed at a specific moment in time. The bulk of health care spending is spent treating chronic conditions. Who’s to say exactly when a person developed high blood pressure or depression. Furthermore, health conditions incur costs that continue long beyond the length of an insurance contract.

Efforts to twist private insurance around these three restraints are destined to produce warped markets and twisted incentives. The regulations currently oozing through congress will make life better for many people, but they do not address the fundamental incoherence of private health insurance.

Act Now Before California Forces the Issue

Sometime in the next couple of months The Federal Government is going to give the state of California a lot of money. After lavishing more than a trillion dollars on Banks, Insurers and Auto Companies, there is a 0% probability that the government will sit idly while the largest state collapses.
There real question is how do we go about propping up California. Whether we like it or not, California will set a precedent for the rest of the country. Believe it or not California is not the only State struggling to keep its head above water. Congress and the administration need to have a strategy ready before Arnold comes crawling cap in hand to Washington.
Rather than putting together an ad-hoc plan for California, we should develop a national strategy for dealing with insolvent states. The plan that I am proposing is simple, non-intrusive and will ensure that Federal Government gets back every penny that it spends bailing out the states.
Federal loans should be made available to any state that chooses to accept them. In exchange, the state will be required to levy a 1% sales tax, whose revenue would be directed to the Federal government until the loan is repaid.
While, no one would enjoy paying the extra tax, it wouldn’t be nearly as devastating as the massive budget cuts currently facing states across the country. By securing a dedicated revenue stream the loan would be virtually risk free for the Federal Government. Furthermore, enacting a national policy would assure investors that state bonds were a safe investment, reducing borrowing costs for every state.
The greatest advantage of this plan would be in avoiding the political circus of negotiating a special bailout for every state in need. My plan would not solve the underlying problems facing California, but that is intentional. It is up to voters and politicians in California to find a long term solution to the state’s budget crises. Allowing Washington to interfere in the fine details of the State budget would be far worse.

Starbucks Overdose

If you have ever been to the loop area of Chicago you have probably noticed that there are a fair number of Starbucks locations. OK, that was a slight understatement. I can’t think of a single location in the Loop that is not within sighting distance of a Starbucks. Given the scarcity of retail space in Downtown Chicago, having three or four Starbucks locations on a single block hardly seems like an optimal allocation.
I am struggling to see the economic logic of extreme chain concentration. Surely the marginal revenue of an independent establishment would be greater than that of the 50th Starbucks within a relatively small area.
Since every location within the Loop is within two blocks of a Starbucks, I can’t imagine that a new location would attract many new customers. However, if one of the Starbucks were converted to an independent shop it would likely attract a large share of customers who preferred not going to Starbucks. Thus you would think that an independent shop would be willing to pay more to lease a location than Starbucks.
I can think of two possible explanations:
1. The major chains that dominate the area are engaged in an implicit price fixing. Basically, Starbucks and the other chains (I am looking at you Dunkin and Caribou) fear that any independent shops would significantly diminish there business. Thus when they open a new location they are really acting to freeze out any independent competitors.
2. Even though the expected return on investment is higher for an independent coffee shop the high price of commercial real estate may scare off many entrepreneurs. For a company like Starbucks committing to an expensive lease is not a great risk, but a local entrepreneur may be unwilling to take the same risk, preferring to locate to a cheaper neighborhood.

I don’t think that these two explanations tell the whole story, so I would be very curious to hear what other people think.

Inequality at Birth

Emmanuel Saez’s work on income inequality has been getting a lot of attention recently, for good reason. He has shown the extent to which inequality has grown rapidly in recent years. The benefit of economic growth this decade has gone almost exclusively to the extremely rich. The top 1% of the population now earn 25% of all income.
Yet I fear that this work may underestimate the true nature of inequality in our society. One of the flaw of much of the work on income and wealth distribution is that it fails to account for age. For example, my income is currently below the median household income; yet as a 23 year old with no dependents I am financially better off than the average American. The way that income and wealth distribution vary throughout the lifecycle of an age cohort is an important area where further research is needed.
In a perfect world everyone would start at the same place, as time passed differences would emerge due to talent, hard work and other elements of the meritocracy. Of course, that is not the world that we live in. Children born in wealthier families start life with a huge head start.
Marion Nestle recently noted that half of the infants in America received food aid last year. It is no secret that fertility rates in America are negatively correlated with income and education. Given the stark level of inequality present in America today, it stands to reason that inequality is even greater among newborns and young children than among the population at large.
This reality could have severe consequences for the future of the American economy and society. Numerous studies have shown how growing up in poverty can adversely affect a persons prospects for life. Is the future generation of Americans going to disproportionately suffer these consequences. Will the relative scarcity of Children from affluent backgrounds give those fortunate few an even larger advantage than the well off currently enjoy. Or will new opportunities open up to the children of the poor.
More research needs to be done to uncover the rates of inequality among households with young children, and to see how this rate has changed over time. A cohort based approach to income and inequality studies would provide a better understanding of how our society and economy is likely to evolve.
While more research is needed, I think it is clear that a significant commitment needs to be made to ensure that our future generation does not disproportionately grow up in poverty.

The bloated private sector vs. the starved public sector

For the past 3 decades faith in the free market powers of the private sector have led to a massive misallocation of resources away from public sector investment. A careful reading of price signals reveal a severe under investment in public goods relative to private sector goods. I would further argue that the unstable bubbly nature of financial markets is the result of excessive capital being allocated to the narrow range of goods and services in which the market works well.
The following contrasting sets of investments opportunities demonstrate how the private sector has become bloated while the public sector has been starved of necessary resources.

Public Education vs. Information Technology

The development and rapid proliferation technologies such as the internet, cell phones and other communication tools has brought undeniable benefits. But is the market calling for more resources to be dedicated to these industries. Not really. Over the past couple of decades, the price of computing power and communication technologies has been in nearly continuous free fall. New innovations quickly become commodities while many of the best and most popular innovations from Youtube to Facebook have failed to find a revenue stream.
If some of the investment in IT has been misplaced, what would be a better use of the bright mathematically inclined minds. Over the long run, human capital is the limiting factor in innovation and growth. The wage differential between educated and uneducated workers is a clear price signal indicating demand for education. Yet we have ignored this rapidly rising price signal by failing to provide adequate support to schools at all levels. The rapidly rising tuitions at public universities is another indicator of declining public support for education at precisely the time when this sort of investment is most needed.

Public Health vs. Processed food

Public health spending is one of the ultimate public goods as it benefits the society as a whole. There is no doubt that American’s spend a lot on healthcare, more per capita than any other country. Yet our health outcomes are hardly impressive. Investing a little more in creating an environment that promotes health could save far more in future healthcare and lost productivity due to preventable disease. From teaching basic nutrition principles to providing safe places for people to be physically active to preventing outbreaks of food borne illnesses our public health efforts have been pathetic due to a lack of commitment.
While, we have barely attempted to create a healthy environment, the food industry has had no trouble bringing new food like substances to market. Given this failure it is not surprising that today’s young people may be the first generation in American history that fails to outlive their parents.



Urban Infrastructure vs. Suburban housing

The housing collapse of the last couple of years makes the misallocation of resources in the housing sector abundantly clear. Yet the market has been sending out the same signals for years. Developers always justified suburban car based residential development as providing what the market. Yet a simple look at price data tells a different story. Real estate prices in walkable urban areas have consistently been far higher than in suburban car oriented areas. In the current crises real estate markets in places like Manhattan, DC and San Francisco have held up far better than the rest of the country.
Yet it would be impossible for private developers to recreate high quality urban environments. These places require significant investment in transit, law enforcement, parks and other amenities that require government support. Without public investment private developers could only create a limited range of housing options. Hence the appreciation of urban real estate prices relative to suburban areas.

The market is incapable of providing the full range of investments needed to maintain a healthy growing society. If we come out of the current economic crises with a more balanced distribution between public and private investment we will be in a better position to maintain long term growth.

What is saving?

I have been thinking a lot about the meaning of saving money. Which brings me to what I call the fundamental question of finance: How does forgoing consumption today translate to increased consumption in the future?

In thinking about this question I have identified six distinct answers to this question:

The dog: Place a bowl of food in front of a hungry dog and it will devour it without hesitation, lick the bowl clean and then look around for more. The dog's world represents the very simplest economic system. What you have now is what you consume now. If there is plenty today the dog will eat itself sick. If there is no food tomorrow he will go hungry.

The squirrel: Before the first human walked the earth, animals such as squirrels discovered the first financial innovation. Just as the squirrel gathers nuts to get through the long winter, there are some goods that we can simply store and use in their current form. This is the simple and most obvious answer to the question listed above. For many people this is as far as they get when thinking about savings. However, money is not a can of beans. Simply storing money today does not automatically translate to purchasing power in the future.

The farmer: Around 10000 years ago humans discovered that seeds left in the ground would grow into new plants. Thus the birth of agriculture also represented the first investments. By not consuming some grain today, early farmers could ensure a reliable supply in the future. Many natural and living things allow this sort of simple investment. We now know that by not clear cutting a forest or fishing a species to extinction we can ensure an adequate supply for the future.

The builder: Some projects take a lot of time and effort before they yield any value. 10 people might have to work for half a year to build a house. Bigger projects like highways and dams can occupy hundreds or thousands of people for years. Of course all of those people need food, shelter and all the other necessities of life. Which brings us to the fourth answer to our big question. When I consume less then I produce, my surplus can sustain those who are working on larger projects. In exchange, I expect to receive some of the benefit of the completed project.

The parent: Over the course of ones life ones needs and abilities change. A new born infant is completely helpless to meet its basic needs. By providing for young children during their peak production years, the parent can count on their children to sustain them as they age. This familial relationship has been a cornerstone of nearly every society in human history. In modern societies this function is often aggregated, in that governments invests in education for children and pensions and medical care for the elderly. The logic is basically the same, individuals in their prime working years consume less then they produce, while the surplus goes to supporting children and the elderly.

The creator: The greatest achievements often require years of effort with only a small possibility of creating anything of value. Great works of literature, billion dollar corporations and medical breakthroughs all follow this pattern. An individual researcher may toil for 20 years with no tangible results before a discovery that creates millions of dollars of value. The artists, entrepreneurs, scientists and writers depend on the savings of the general population to support them in their efforts.

The financial sector is responsible for taking the excess production of today and using it to meet the needs of the future. Some goods can be stored for the future, but the vast majority of the production is services or perishable goods that cannot be stored. Forsaking consumption today does not guarantee that there will be plenty tomorrow.

3 Technologies that don't impress me much

I am something of a technophobe. When some new technology is hyped as the latest greatest thing, nine times out of ten I am unimpressed.

1. Cell Phone Features: I want to be able to do three things with my phone; talk, text and store numbers. Beyond that I value battery life over every other damn thing that can be put on my phone. I don't need to check email, take photos, look up restaurant reviews or play scrabble 24 hours a day. The best phone I have ever had was the first one I got for free with service in high school .

2. Kindle: I like reading books. Removed from electronic connections it allows the reader to spend hours immersed in the authors world experiencing the content as the author envisioned it. When reading from electronic content people want to customize the view, follow links, look up unfamiliar concepts etc. I just feel no desire to fold books into the broader spectrum of electronic media.

3. Twitter: Seriously, I don't get it. Has anything so useless ever been so hyped. Have any of the throngs of reporters breathlessly declaring twitter the second coming of language ever actually read a twitter. We all have a stream of random thoughts running through our heads, but until now no one expected everyone they have ever met to care.

Kohelet 3:19

For there is a happening for the children of men, and there is a happening for the beasts-and they have one happening-like the death of this one is the death of that one, and all have one spirit, and the superiority of man over beast is nought, for all is vanity.

American's Comprehension Problem

I have to link to this post by Matt Yglesias: anyone who thinks that the US should be getting involved in conflicts around the world should read this.

"in a straightforward contest of power between the United States and Pakistan, we can of course win. But in a scenario where we are trying to manipulate the situation in Pakistan in such-and-such a way and Pakistani actors are trying to manipulate the situation for their own ends, the odds of us actually outwitting the Pakistanis are terrible. They’re in a much better position to manipulate us than we are them."

What if Everything Goes to Shit

This post is pure speculation, it is not a prediction of what I think will happen, but is my attempt to think through a worst case scenario.

If all of the attempts to revive the economy fail and we continue sinking into a deeper depression for the foreseeable future at some point politics will trump economics as the primary concern. The US is blessed with an extremely resilient political system; through civil wars, depressions, world wars and countless other trials our system has continued uninterrupted without so much as a delayed election. Most countries aren't so fortunate. A prolonged depression would have profound geopolitical consequences.

Let's start with Europe: I doubt the Euro would survive a depression. The worse the economy becomes the greater the pressure to devalue the currency will be in hard hit countries such as Spain. Populist pressure will force governments in countries such as Spain, Portugal, Greece, Italy and Ireland to drop the Euro. As the Euro zone retracts, Euro nationalism will emerge as an important force. Pressure to punish the defecting nations will create strong tensions between the remaining Euro countries and the rest of Europe.

In Eastern Europe, the door to further Integration will slam shut. Many countries will look to strengthen ties with Russia as further integration with a crumbling EU will seem less probable and less appealing. Old communist parties will emerge from the dustbin of history on a wave of populist support. In the Balkans tensions between Serbs, Croats and Albanians will return with a vengeance. Without the prospect of EU membership as an inducement to sound moderate policies, extreme nationalists will gain power.

In India, a severe downturn will destroy the moderate Congress led government of Monmohan Singh. My prediction is that the Hindu Nationalist BJP and the Communist party, the second and third largest parties in parliament, will join forces to promote an extremist agenda. Ethnic violence will escalate and tensions with Pakistan will emerge into a full scale war. Millions of members of the emerging middle class will find themselves thrust back into poverty.

The Middle East will get Ugly.

In Latin America, I predict a sharp Backlash against the moderate pro-growth goverments in Brazil, Colombia and Mexico. More countries will align themselves with Hugo Chavez in a defiantly anti-american and anti-capitalist pose. Mexico may feel the worst of it. The government is barely hanging on against the drug cartels today. In a severe depression, it is not hard to imagine the government outright failing.

So how will it all end? Much like the last depression, geopolitics will force the remaining democratic governments to enact the necessary fiscal stimulus. In other words war. If the various drug cartels succeed in toppling the Mexican Government we would be forced to act. America cannot tolerate an anarchistic failed state directly to our South. A full scale land invasion of Mexico combined with increased military spending around the world may be enough to reignite aggregate demand.

If the economy continues to contract at its stunning pace, one way or another fiscal stimulus will have to pull us out. Will it be in the form of productive investment in infrastructure health and education, or will it be in the form of devastating wars in Mexico, the Balkans, the Middle East and South Asia.

Reintroducing the Enron Rule

I am bringing back an old thought that first occurred to me in 2001 after the collapse of Enron. Businesses exist to create real value for real people. Any business should be able to explain how the are adding value and for whom. Ideally, this should be a simple process; a sentence or at most a paragraph. If a company can't explain this that should raise a red flag.

Of course, some companies provide genuinely obscure products or services. These companies profits should reflect the esoteric nature of their business. The largest most successful businesses from McDonalds to Microsoft should be those companies that are serving vast swathes of the population. If a business claims that its operations are so complex that mere mortals couldn't possibly comprehend them, that should raise about 10 million red flags.

Why are T-Bills so popular

One of the puzzling aspects of the current economy is the soaring demand for US treasury bonds. On the face of it, T-Bills seem like a pretty terrible investment. The yields are low and given the massive government and current account deficits being run by the United States, it is highly likely that the dollar will lose value relative to other currencies.

But these loans aren't investments, they are insurance. With the global economy in free fall nobody knows how bad things could get. There is a non-zero probability that we could be witnessing a true economic collapse. The sort of era defining event that will signal the end of the 500 year march of human progress and plunge us into a new dark ages. How will we know when it's time to bust out the old amour suit. A good guess will be when treasuries fail. In other words if the US government defaults, we are all fucked. The only assets that will be worth anything will be shotguns and canned beans.

Lets say things don't get that bad, there is still a long way to fall. If the economy continues contracting at its current rate, by the end of 2010 things will be as bad as the 1930's. An economic collapse of that magnitude will have profound political consequences. Which brings us back to the original topic of the post.

In a climate of extreme uncertainty, the long history of stability is a unique asset of the American economy. The Euro is the most obvious rival currency to the dollar, but with less than a decade of experience the Euro has never survived a severe crises. If this recession hits the depths of the 1930,s politicians in hard hit countries like Spain and Ireland will be under intense pressure to break free of the Euro. During the great depression, countries that abandoned the gold standard benefited immensely from their devalued currencies.

Developing, countries don't offer better security prospects. It is hard to think of a developing country whose economic and political stability wouldn't be threatened by a severe depression. The communist party is the third largest party in India's parliament and the nationalist BJP is the second largest. It is easy to imagine a severe downturn tipping the balance of power towards these parties at the expense of international investors.

Latin America has a long history of socialist governments taking power and appropriating private property. It is not hard to imagine these elements gaining strength in countries such as Brazil, Mexico and Argentina. Africa and the Middle East are considered risky places to invest for too many reasons to list here. It is uncertain if the Chinese government can maintain stability through a severe downturn.

That leaves the US and the other wealthy English speaking countries as the most likely economies to survive a severe downturn. The catastrophe in Iceland demonstrates the danger of lending too much to a small economy. Given the quantity of money looking for a harbor it is possible to imagine international capital overwhelming a country such as Canada or Australia. Simply put it is possible to imagine the US economy surviving a complete meltdown in Canada, but there is no way Canada survives a collapse in America.

So what does this all mean for the future. As long as complete systemic collapse remains a real possibility, investors will be rushing to loan money to the US government. But as investors gain confidence that recovery is in sight demand for American debt will dry up. One sign that a recovery is on the horizon will be a decline in the dollar relative to other currencies. As the economy rises from the grave the dollar will steadily weaken.

This should be encouraged. One of the driving forces behind global instability has been the huge amounts of foreign capital entering the US economy and the countervailing large trade deficit that Americans have run. If we emerge from this crises with a more balanced global economy that would be a good thing.

The Michigan Exodus

I grew up in Michigan, and like thousands of other young people from Michigan I now live in Chicago. Everywhere you go in this city you meet Michigan refugees, people who have realized that their future is not in Michigan. I look forward to the formation of an ethnic enclave, like Chinatown, complete with a Coney Island, Big Boys and Vernors available in every restaurant.

For at least half a decade, Michigan has had the worst economy of any state, so its not surprising that thousands of people are choosing to settle elsewhere. I know from my own experience that the bulk of my friends from high school now live elsewhere. However, we'll probably have to wait until the next census results come out to know the full extent of the damage. It's a given that Michigan will lose at least one seat in the house, but could the state be poised to lose two or even three representatives. I wouldn't be surprised.

Obviously, the decline of the US auto industry was going to hit Michigan hard, but the failed urban policies that Detroit embraced in the 60s are as much responsible for the predicament Michigan currently faces. No city embraced the pernicious movement towards suburbanization as wholeheartedly as Detroit. The Detroit Metro is one of the most segregated in America. The city of Detroit is nearly 90% black, while nearly all white people live in more affluent suburbs. The tension between black city and white suburbs has led to a complete failure of regional planning. The state of public transportation in the metro area is pitiful for a region of nearly 5 million people.

Richard Florida's excellent piece in the Atlantic demonstrates the importance of vibrant urban areas to promoting innovation and economic growth. Unfortunately, Detroit offers little to the creative class. No educated young person would choose to settle in Detroit when midwestern cities like Chicago, Milwaukee and Minneapolis have so much more to offer. Let alone the opportunities available in coastal cities like New York, DC or Seattle.

Anyways, these are my thoughts on the sad state of Michigan. I would love to hear from other ex Michiganders.

My take on banking regulation

I wrote these articles last fall, there not particularly original, but they sum up what I think is the basic problem with the financial sector.

Whats wrong with finance

How to fix it

The crack of dawn

Obviously, the economy sucks, but I get the feeling that we are seeing the very early signs that things are getting better. After three months of nothing, but awful news there appears to be several reports showing some good news. While the economy is still contracting, perhaps we are no longer in free fall.

Are you sure?

The following question was asked in a Newsweek poll
How much longer do you think the current economic recession is likely to last? Would you say?

12 Less than 12 months
54 One to two years
23 Three to five years, OR
8 More than five years?
3 (DO NOT READ) Don’t know

It always surprises me how few people are willing to admit that they don't know the answer to a question.

Is America's power shrinking? Who Cares?

Robert Kaplan's article in the Atlantic concludes with this dire warning;

"Defense policy will be increasingly geared toward protecting the homeland, even as globalization makes for a smaller, more intricately connected world. America, in the final analysis, will be better protected, even as its global reach wanes."

I am supposed to worry because... Maybe, I'm just a left wing nut case, but isn't the protecting the homeland the primary reason that most Americans are willing to spend hundreds of billions of dollars on the military. I didn't realize the goal of US defense policy was to ensure that American diplomats get to sit at the cool table at international summits.

I have yet to hear a compelling argument why I should care about America's global dominance. Even if China were to develop a military that could threaten ours, would it really be so bad. I don't think anyone in either country is eager to start a war. Same with India, the EU or any other country that could theoretically challenge America's military. (Not that anyone is even close to challenging us in this area.)

Are you threatening me?

You've probably got one of the catchy Free Credit Report songs songs stuck in your head. The commercials are cute, but am I the only who finds the whole campaign a bit extortionary. The message seems to be; we can fuck your life up so you better sign up for our service. If an error on your credit report is so devastating don't the agencies have an obligation to ensure that the info is accurate.

Why are banks still foreclosing?

Can anyone think of a more value destroying transaction than foreclosing a home in a dead real estate market. There are more than 700 houses in Detroit listed for less than $3000. And there not selling. In this climate banks can't possibly expect to recover much of anything from a foreclosed. Considering legal costs, taxes and maintenance the banks would surely be better off just letting the borrower stay in the house. And of course all of these foreclosed homes are killing property values, which leads to more foreclosures. And I haven't even talked about the impact on evicted individuals.

Governments should offer reduced taxes on foreclosed properties if the former owner is allowed to remain in the house. This is a win win win solution. The borrower gets extra time in the home to figure out there next move. The city can stabilize property values by keeping a glut of foreclosed homes off the market. But the big winner is the bank who can hold on to the house at little cost until the market improves.