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1 – 2- 3 – 4, I declare a trade war

March 25, 2010

After meeting with officials at the Treasury and Commerce Departments on Wednesday, China’s deputy commerce minister, Zhong Shan, told reporters, “The Chinese government will not succumb to foreign pressures to adjust our exchange rate.”

(…)

China’s position has raised the ire of members of both parties in Congress, who say that the exchange-rate problem is holding back job growth in the United States. Two senators, Lindsey Graham, Republican of South Carolina, and Charles E. Schumer, Democrat of New York, have introduced legislation that would effectively compel the Treasury to cite the Chinese currency for “misalignment.”

The Treasury has not found China to be manipulating its currency since 1994, making the argument, among others, that manipulation involves intent. Successive administrations have argued that it would be more fruitful to convince China that its interests would be served by allowing the renminbi to appreciate, a move that could stimulate domestic consumption in China and help wean its economy off a reliance on American consumers.

With unemployment near 10 percent in the United States, Congress has seemingly run out of patience with that argument.

This move will potentially lead to a trade war, but in my opinion the short term pain will be worth the long term gain if we can force China onto a more level playing field. Unlike many of my conservative blogger counterparts I also think that this will actually help unemployment in the US. (I have noticed that overwhelmingly those who oppose a move like this claim some connection to the financial sector on the coasts.)

-elsewhere-

The Canadian Banking Fallacy

Despite supposedly tougher regulation and similar leverage limits on paper, Canadian banks were actually significantly more leveraged – and therefore more risky – than well-run American commercial banks. For example JP Morgan was 13 times leveraged at the end of 2008, and Wells Fargo was 11 times leveraged. Canada’s five largest banks averaged 19 times leveraged, with the largest bank, Royal Bank of Canada, 23 times leveraged. It is a similar story for tier one capital (with a higher number being safer): JP Morgan had 10.9% percent at end 2008 while Royal Bank of Canada had just 9% percent. JP Morgan and other US banks also typically had more tangible common equity – another measure of the buffer against losses – than did Canadian Banks.

If Canadian banks were more leveraged and less capitalized, did something else make their assets safer? The answer is yes – guarantees provided by the government of Canada. Today over half of Canadian mortgages are effectively guaranteed by the government, with banks paying a low price to insure the mortgages. Virtually all mortgages where the loan to value ratio is greater than 80% are guaranteed indirectly or directly by the Canadian Mortgage and Housing Corporation (i.e., the government takes the risk of the riskiest assets – nice deal if you can get it). The system works well for banks; they originate mortgages, then pass on the risk to government agencies. The US, of course, had Fannie Mae and Freddie Mac, but lending standards slipped and those agencies could not resist a plunge into assets more risky than prime mortgages. Let’s see how long Canada resists that temptation.

(…)

Proposing a Canadian-type model to create stability in the U.S. is, to be blunt, nonsense. We would need to merge our banks into even fewer banking giants, and then re-inflate Fannie Mae and Freddie Mac to guarantee some of the riskiest parts of the bank’s portfolios. With our handful of new “hyper megabanks”, we’d have to count on our political system to prevent our banks from going wild; Canada may be able to do this (in our view, the jury is still out), but what are the odds this would work in Washington? This would require an enormous leap of faith in our regulatory system immediately after it managed to fail repeatedly and spectacularly over thirty years (see 13 Bankers, out next week, for the awful details). Who can be confident our powerful corporate lobbies, hired politicians, and captured regulators can become so Canadian so soon?

Most of the comments didn’t agree with this assessment.

What do you think of this?

Furthermore, you don’t want your military officers to think themselves unqualified to wade into Constitutional questions. While I have no doubt that the current POTUS will uphold his oath fully and in all particulars, there are worrisome precedents being laid, at a medium pace. Who knows when the country could elect the American equivalent of Caligula?

When you attend Tea Parties, I think you note a healthy military presence. I can’t say that it exceeds the normal society/military ratio, but I’ll venture that those who’ve sworn to ’support and defend the Constitution against all enemies foreign and domestic’ are deeply curious about this Progressivism that seems to have eaten much of the political vitality of the country.

(…)

The Constitution (as amended) is something I hold several notches below the Bible itself in importance.

It makes me think three words – Argentina, Chile, Iran. I am sure that isn’t Smitty’s intent, especially given the next sentence –

I argue for a proper striking of the portions that have proven bad ideas, like the 16th and 17th Amendments, but don’t expect that to occur other than through Article 5.

but I see more and more of this rhetoric creeping into the conversation, from people I don’t trust as much as I do Smitty, and it is worrisome. When the military starts considering itself the arbiter of what is acceptable in government you stop having a representative democracy and descend into 3rd world military dictatorship status. It is even more worrisome if they consider the bible more important in guiding their actions than the Constitution.

Pretending We’re Not In a Trade War

Health bill included big Republican idea: individual mandate

“The truth is this is a Republican idea,” said Linda Quick , president of the South Florida Hospital and Health care Association. She said she first heard the concept of the “individual mandate” in a Miami speech in the early 1990s by Sen. John McCain , a conservative Republican from Arizona , to counter the “Hillarycare” the Clintons were proposing.

McCain did not embrace the concept during his 2008 election campaign, but other leading Republicans did, including Tommy Thompson , secretary of Health and Human Services under President George W. Bush .

Seeking to deradicalize the idea during a symposium in Orlando in September 2008 , Thompson said, “Just like people are required to have car insurance, they could be required to have health insurance.”

Among the other Republicans who had embraced the idea was Mitt Romney , who as governor of Massachusetts crafted a huge reform by requiring almost all citizens to have coverage.

“Some of my libertarian friends balk at what looks like an individual mandate,” Romney wrote in The Wall Street Journal in 2006. “But remember, someone has to pay for the health care that must, by law, be provided: Either the individual pays or the taxpayers pay. A free ride on government is not libertarian.”

Romney was referring to the federal law that requires everyone to be treated in emergency rooms, regardless of their ability to pay.

During his presidential election campaign, Barack Obama was opposed to an individual mandate, preferring instead strong requirements that employers be required to provide coverage. “I’m not sure how ready the country is politically to accept the overall mandate,” Irwin Redlener , a Columbia University physician and adviser to Obama, told The Miami Herald during the campaign.

I remember Romney and all the garbage he took over the individual mandate, I don’t remember any of the rest of this. Am I going insane?

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9 Comments leave one →
  1. March 25, 2010 11:42 am

    “I remember Romney and all the garbage he took over the individual mandate, I don’t remember any of the rest of this. Am I going insane?”

    I remember getting the impression at the time that Obama’s stated opposition to the individual mandate was a reaction to all the garbage other candidates were getting over it, and that (just like his stance on gun control) some hints of that came up but were buried by the media as quickly as possible. In my mind, it had a very strong flavour of “Holy crap, people really hate this, I’d better say I’m against it.” You know, as if he was just saying what he thought he had to in order to get elected.

    • jenn1964 permalink*
      March 25, 2010 12:04 pm

      You know, as if he was just saying what he thought he had to in order to get elected.

      That seems to be a theme with him doesn’t it 🙂

      • March 25, 2010 1:00 pm

        To be fair (even if I don’t want to), that seems to be a theme with most politicians, not just Obama. He’s just seems to be a little more obvious about it than most.

  2. jenn1964 permalink*
    March 25, 2010 5:27 pm

    Too true

  3. xbradtc permalink
    March 25, 2010 5:56 pm

    When the military starts considering itself the arbiter of what is acceptable in government you stop having a representative democracy and descend into 3rd world military dictatorship status. It is even more worrisome if they consider the bible more important in guiding their actions than the Constitution.

    I have to wonder how much participation is by the members of the military, and how much is by veterans. ‘Tis a bit of a difference. Certainly, I subscribe to civilian control of the military. Unlike the clear cut legal obligation to refuse an illegal order, there is NO authority to for members of the military to decide the government is illegitimate.

    But that is not to say that veterans and retirees can’t or shouldn’t express themselves, and loudly at that. Even active duty members may, with some limitations, participate in the political process. But I’ve not seen a single person in uniform at a TEA party.

    As to whom one owes a higher allegiance, to the Bible or to the Constitution, that’s a bit of a misnomer. I owe a higher allegiance to God, not a book. And having sworn before God and man to become a member of the service, I had an obligation to uphold that oath. Should they conflict, I could only appeal to become a conscientious objector.

    • jenn1964 permalink*
      March 25, 2010 7:06 pm

      I certainly agree with the rights of veterans and retirees to participate fully but Smitty specifically referenced military officers.

      Furthermore, you don’t want your military officers to think themselves unqualified to wade into Constitutional questions.

      If it was anyone else that would send up big warning flags in my mind.

      • xbradtc permalink
        March 25, 2010 10:05 pm

        Jenn, that’s were I see a disconnect. I haven’t seen any officers out and about protesting. Since, to do so in uniform would be against the UCMJ. And for the most part, military officers are no more and no less qualified than any other person when it comes to Constitutional questions. The only possible issue is that they may actually face real issues. But that is highly unlikely-See your fair warning post.

  4. jenn1964 permalink*
    March 25, 2010 11:13 pm

    I haven’t either, although I have heard that there are some joining oathkeepers, but I am not actually making accusations against the officer corps. I am concerned that people are talking about this like its a good idea. Defaulting to a position where we want the military to make the hard choices via a coup. That would be a very bad idea. And talk about the death of the republic. Once it has happened once that line can’t be uncrossed. Compared to that all the BS about health care and immigration reform etc. is nothing.

  5. Portlandic permalink
    March 30, 2010 11:11 pm

    > The Constitution (as amended) is something I hold several notches
    > below the Bible itself in importance.

    Whoa. The Constitution is the exemplar of social contracts which hold a deliberately pluralistic society together. The Bible doesn’t have the safeguards which protect freedom, and I’d rather not live in a Biblical theocracy, which is there such thought could take us, if this goes on…

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