One month ago, Dear Leader graced the Knesset with his soaring oratory:

And that is why the founding charter of Hamas calls for the "elimination" of Israel.

[...]

Some seem to believe that we should negotiate with the terrorists and radicals, as if some ingenious argument will persuade them they have been wrong all along. We have heard this foolish delusion before. As Nazi tanks crossed into Poland in 1939, an American senator declared: "Lord, if I could only have talked to Hitler, all this might have been avoided." We have an obligation to call this what it is -- the false comfort of appeasement, which has been repeatedly discredited by history.

Little more than a month later, the following happens. Israel and Hamas agree the outlines of a truce.

We should know way better than to think that peace will now suddenly break out in the Holy Land. But we should take heart that the retarded philosophy of George Bush is now widely recognized around the world for what it is.

If the Israeli government is prepared to engage in the actions that the President regards as tantamount to Nazi appeasement, less than a month after being warned by the same President of the risks from doing just that... well, I'll be darned.

Alan Greenspan, March 17, 2008:

“We will never be able to anticipate all discontinuities in financial markets.”

Alan Greenspan, April 6, 2008:

"I have been surprised by the fierceness of investors in retrenching from risk since August [2007]."

Bill Gross, as reported by Bloomberg:

During a 30-minute discussion on banks several months before the global credit crisis, Greenspan's ``brilliance in terms of forecasting the potential for exactly what happened was a big money saver for us,'' Gross said yesterday at a conference organized by the Asia Society in Los Angeles. ``He's made and saved billions of dollars for Pimco already.''

For those that don't know, PIMCO is an asset management company and Greenspan has, since he left the Fed, been a consultant to the firm.

But the point here is that since the credit crisis broke, Greenspan has played a number of exculpatory cards - his favorite one being that the Fed could do nothing about the housing bubble especially, either by following different monetary or regulatory policies. What Bill Gross seems to say however, is that when Greenspan was paid to advise PIMCO on the impacts of a credit crunch, he was remarkably prescient.

Just saying.

"The first rule of holes is when you’re in one, stop digging. When you’re in three, bring a lot of shovels."

Erm, okay... does anyone have a clue what this is supposed to mean?

Lest anyone's forgotten the phrase that launched a thousand shills:

"So it's not surprising then that they get bitter, they cling to guns or religion or antipathy to people who aren't like them or anti-immigrant sentiment or anti-trade sentiment as a way to explain their frustrations."

I've tried to follow the the pundit reaction - obviously every politically-interested Joe has had their say - and below are excerpts from some of the big ticket commentators. (please anyone add further links in the comments section)

Bill Kristol takes a leaf from the Jonah Goldberg Liberal Fascism play-book. Obama, like Marx, speaks about hardship and religion. Hint. Hint, hint. (Cue Fox for the pavlovian response)

Bob Herbert says its actually all about race. (Obama said, no, it's not that simple.)

David Brooks says Obama said nothing at all. ("economic light beer" was his hapless bourgois description of a speech that was hardly a grand policy outline)

George Will, with a particular eye on 20th century history, says "Obama's dismissal is: Americans, especially working-class conservatives, are unable, because of their false consciousness, to deconstruct their social context and embrace the liberal program".

John Fund referred to Obama's "cultural miscues".

Bob Shrum says the acid test is whether Obama can credibly be attacked as an elitist by his political opponents.

I don't know about others, but after checking out what Obama actually said, his key point was undoubtedly this:

"...our challenge is to get people persuaded that we can make progress when there's not evidence of that in their daily lives."

Leaving aside Shrum's comments - which are I think fairly uncontroversial analysis - it seems that like the speech in Philly on race, it's not Obama's message that the punditocracy object to, it is that they either don't get the message, or don't want the message to be heard.

As I read it, Obama's point is a lot less about "bitterness" that people feel about their personal circumstances than it is about cynicism towards politicians and the political process.

This isn't a new theme; it's not original to attack the Establishment and the political status quo. And it is not at all surprising to have the Establishment Media railing against the upstart. What's grimly ironic is seeing the elites - none of whom, I believe, have ever run for political office - chastizing Obama for sounding elite and aloof when the crux of Obama's argument is that politics has gotten detached from the matters that impact your ordinary American.

Obama is dead-right about what his challenge is: convincing voters that he can make a difference. The false consciousness he's fighting against - that politicians can't make a difference - is not simply a myth propagated by the likes of George Will and his cocktail weanie chums, it is debate they don't even want to see.

Alan Greenspan won't lie down. His critics have, admittedly, been relentless, but so is the former Fed chairman. Here he mounts another defense of his reputation.

It is lengthy but no less of a misdirection than anything he has written since the Age of Turbulence was serendipitously published.

Greenspan: "I am puzzled why the remarkably similar housing bubbles that emerged in more than two dozen countries between 2001 and 2006 are not seen to have a common cause."

The assumption is that property bubbles in eg, Britain, Spain, New Zealand, South Africa and Dubai, have been driven by the same macro forces that fuelled the subprime bubble in America. Greenspan wants you to believe this. Greenspan, in fact, needs you to believe this.

Greenspan is on one level correct - long-term interest rates during this decade fell to unusually low levels in an almost unprecented convergence. And no-one really seems to know how to explain this convergence. It was one of those macro phenomena - like productivity growth in the 1990s - that you just saw but couldn't explain.

And in fairness, he admits that "each individual housing bubble has its own idiosyncratic characteristics". But what is beyond debate is that unless all these markets suffer similar abrupt declines in their real estate markets, caused by rising delinquencies and other real economic factors, then Greenspan is clutching at straws. What is very likely is that these markets will recede as a consequence of the credit crunch; so what Greenspan is hoping is that correlation and causality will throw up another helpful "forces of globalization" screen behind which he can hide.

It is against this backdrop that you should see his determination to argue that forces beyond his control - long-term interest rates, globally - were responsible for the American housing bubble, at least more so than his monetary or regulatory policy.

Thread 1 with which Greenspan weaves his argument is this - that the sustained, low Fed funding rate was not instrumental in "adding to the bubble". His reasoning - the people who have advanced this argument have been using models that are not able to predict macro trends. So therefore their findings are invalid. And actually, looking at inflation at the time, the Fed had no reason to tighten.

Thread 2 is this - ARMs did not fuel the bubble, because ARMs are a very weak forecaster of home prices. And long-term borrowing was pretty cheap anyway so you wouldn't have needed ARMs to fuel a bubble.

Thread 3 - "I do believe bank risk managers and loan officers are more knowledgeable than government bank regulators." It's not all that clear what the argument is, I can only infer that Greenspan is saying that regulators were powerless to prevent what the private sector could not avoid.

Because he goes on to argue that: "The problem is not the lack of regulation, but unrealistic expectations about what regulators are able to anticipate and prevent. How we otherwise explain how the FSA, whose effectiveness is held in such high regard, fumbled Northern Rock? Or in the US, our best examiners have repeatedly failed over the years. These are not aberrations."

I think he's saying regulators - and regulations - are useless.

Thread 4 is more specific - "The core of the subprime problem lies with the misjudgments of the investment community."

There's a fair bit of truth in this,, and then Greenspan goes on to say: "Subprime securitization exploded because subprime mortgage-backed securities (MBS) were seemingly under-priced (high-yielding) at original issuance."

I think the better characterization, as pretty much everyone in the industry will tell you, is that in the low interest rate environment through the last several years, investors aimed at subprime secured debt because the yields on prime were anemic. The low interest rate environment, which Greenspan argues fueled the borrowing boom was also instrumental in drving the investment boom.

Greenspan adds a further more obvious point - that mortgage underwriting standards collapsed - but then reverts to Thread 3 to ensure that Thread 4 does not stick out as a reasonably coherent argument.

He says: "Counterparties, of course, also confront uncertainty but they appear invariably to know more about their customers than do regulators". This has nothing to do with anything.

Buyers of mortgage-backed securities do not have counterparty risk. They have market risk or credit risk, depending how you want to analyze the product. But not counterparty risk. The fact he uses counterparty and credit risk interchangeably tells a good deal about what Greenspan doesn't get about the mortgage business.

When Greenspan says, "Counterparty surveillance needs to be repaired, not abandoned", he confirms he doesn't know he's making no sense. Whilst pointing to the "collapse in bank underwriting standards", and simultaneously holding that "bank risk managers and loan officers are more knowledgeable than government bank regulators", it's hard to figure out who he's exhorting not to abandon counterparty (he means credit) surveillance. The regulators, who've left the market largely unchecked, or the market itself, which has proven it abandoned the surveillance already?

As an aside, this is my favorite fool's comment on mortgage-backed securities - "In the meantime markets are readjusting risk spreads". He should add: such that securitization models no longer work. Greenspan need only pick up the phone to one of his Wall Street contacts to have this confirmed.

Thread 5 is wonderfully defensive. It is Greenspan defending the fact, like everyone else, he has an ideology - Ayn Rand rules my world - and that it's no basis on its own for him to be criticized.

Yet he's prepared to say, in the middle of this, that "I have been surprised by the fierceness of investors in retrenching from risk since August".

Of course, it's Greenspan's ideology that results in his surprise when these investor stampedes take place. That's the point about his tenure as Fed Chairman, that when you have someone who believes in the perfection of the markets, who does not believe that regulators have a role even in establishing baseline standards, who is unable to recognize the risks of far-from-equilibrium positions, and who is blind to what regulators can do to bring a measure of stability to our economy... then, you've had the wrong man in the job. If someone believes:

The problem is not the lack of regulation, but unrealistic expectations about what regulators are able to anticipate and prevent. [...] in the US, our best examiners have repeatedly failed over the years. These are not aberrations.

Then there's no doubt that person cannot, ideologically, take responsibility for what played out under his tenure. This is not a man who wanted to regulate financial markets, and now ithinks it's acceptable to say, well heck, what could I have done?

America, and the world, is now relying on Ben Bernanke to teach him a lesson.

The Mav'rick has penned an opinion piece for the UK Financial Times. Worth a read.

One thought experiment is - what if McCain had written this in, say, the Washington Post? Because the Mav'rick has the following to say:

- "Our great power does not mean we can do whatever we want whenever we want, nor should we assume we have all the wisdom and knowledge necessary to succeed."

- "When we believe that international action is necessary, whether military, economic or diplomatic, we will try to persuade our friends that we are right. But we, in return, must also be willing to be persuaded by them."

- "We cannot torture or treat inhumanely the suspected terrorists that we have captured. We must close the detention facility at Guantá­namo and come to a common international understanding on the disposition of dangerous detainees under our control."

- "The risks of global warming have no borders. Americans and Europeans need to get serious about substantially reducing greenhouse gas emissions in the coming years or we will hand over a much-diminished world to our grandchildren."

- "There is such a thing as good international citizenship. If we wish to be models for others, we must be model citizens ourselves."

Unless I've been living in a parallel universe the last half-dozen years, these ideas are kryptonite to the Base. In fact they read rather like the RNCC rap-sheet against John Kerry. So that's one angle to have fun with.

But why two cheers for McCain? Well the first cheer is a resounding "bravo" for his advocation of internationalism. TPMC veterans will know the major debates we had a year or so back about the Concert of Democracies and other grand Truman Project plans, and I for one haven't shifted from a belief that you cannot formalize a "League" (as McCain puts it) of democracies. But I think it is desirable and inevitable that democracies will work together in defense of common interests - in a league of sorts - and McCain's recognition that this will happen on the basis of persuasion is realistic and correct (and makes a formalized League therefore counter-intuitive).

The second cheer for McCain is that he has said all of this. Because whatever the '08 Election might deliver in November, if it can sideline the rabidly nationalistic and xenophobic extremists in this country, that would be a very, very good outcome.

But here's where McCain fluffs his line - no apologies for the Iraq foreign relations fiasco that split NATO, and is front and center of European mistrust of American foreign policy, and he consequently winds up making contradictory statements on whether his League of Democracies should be called on to help out in Iraq.

In one breath, he consciously avoids calling for Europe to send resources to Iraq (rather, "They must spend the money necessary to build effective military and civilian capabilities that can be deployed around the world, from the Balkans to Afghanistan, from Chad to East Timor"), whilst in another, he declares that "struggling young democracies, such as Iraq, Afghanistan and Lebanon, that need and deserve help".

There are any number of ways to look at the McCain article - not least politically - but here's the big thing for me. McCain, in an attempt to repair relations with Europe by promising that America will be a "model" citizen, singularly fails to address the biggest issue of the last decade that has divided the two continents on foreign policy.

And if symbolism counts for anything, I'd mark down that McCain fudged this reconciliatory effort the day after Barack Obama sensationally nailed his speech on race relations.

But do read the article. There's a good deal in there that reflects favorably on McCain - there's a good deal that we should surely take to heart - but there's also a fair indication he isn't in the same league as Obama.

You must have seen the story - Prince Harry has been deployed in Afghanistan.

Until today. And the British military brass are mightily pissed off.

From what I can tell, a rumor about his deployment circulated on an Australian website in January, and then on a German site earlier this month. But because these weren't big names on the net, the media black-out held and the deployment remained unreported.

What changed it all was when Drudge headlined the story. At least that's what the BBC editors are saying. (this post from the BBC is also interesting in explaining why they agreed to self-censor)

At that point, the media and the British military accepted the game was up and the news broke.

I'll leave aside the media self-censorship question, though my personal view is that so long as the media entered into the arrangement voluntarily with the British government, that is their right and they did not break any inviolable code of journalism.

But what to make of Drudge? Why did he break this story? It's not like he needs to prove he's the Daddy of internet gossip, and it's not like this story is of particular importance to anyone. Of course the story is readily consumed because it involves the British Royal family, but is that the sole reason for Drudge's decision to publish?

To my mind, all the story did was prove that high profile individuals will be stopped from serving their country. By infotainment greedheads like Drudge. No-one will care about this story next week, but thanks to Drudge, Harry's career in the British Army - a very bright career by all accounts - has been compromised again.

I typically don't tend to feel sympathy for the biggest winners of the lucky sperm lotto, but Drudge has proven that there is nothing that the Prince Harrys of this world can do that will not be tabloidized. Self-sacrifice, courage, and service are ignorable commodities to the Drudge's of this world, and I can't think of anyone more deserving than Drudge of having vindictive campaign launched against him.

The Royal Family, lest it be forgotten, is pretty good at these as well, and right now Drudge is fair game. Whilst I would not expect the media here to start taking shots at the man who rules their world, and certainly not the rightwing blogosphere despite the way this story has dicked around the British Army, but it might be worth keeping an eye on the British press once the Royal Family's PR machine goes to work on the Eggman.

Bill Kristol today - "Democrats should read Kipling"

Bill Kristol's basis for decreeing thus? He "browsed" a 1942 Orwell essay about a T. S. Eliot edited anthology of Kipling's poetry.

So first thing to say is that there is no evidence Kristol himself has in fact read any Kipling. He's just read Orwell who is critiquing someone else's sampling of Kipling's ouvre.

Good start.

Helpfully, however, Orwell's essay is available on-line. And this is where Kristol's shallowness is plain to see.

On the understanding that Kristol "browsed" this essay, I take it he did not read the essay front to finish. In fact, given he quotes from only the first and final paragraphs of a 5,000+ word essay - indeed an eminently quoteable essay - this assumption seems rather well founded.

But anyway, let's play Kristol's game and "substitute Republicans for Kipling and Democrats for the opposition", and see where this leads. (Athough, seeing as throughout the piece Kristol is quoting Orwell as opposed to Kipling, there's a obviously question as to whether Kristol ought to be imploring Democrats to read Orwell...)

Orwell has plenty of unkind words for "the opposition" (this phrase is used as a catch-all to describe anti-establishment, anti-imperialist British opinion). But here's what he has to say about Kipling -

1. "Kipling is a jingo imperialist, he is morally insensitive and aesthetically disgusting." [Note how Kristol deftly slices off the clause of the sentence, yet retains the last clause despite the fact this is an opinion on Kipling's literary stylings, and wholly irrelevant to Kristol's argument.]

2. Of the Kipling poem, "Recessional", Orwell writes, this "is a denunciation of power politics, British as well as German."

3. He summarizes Kipling as "the prophet of British Imperialism in its expansionist phase".

4. He points to Kipling's naivety - "It is notable that Kipling does not seem to realize [...] that an empire is primarily a money-making concern. Imperialism as he sees it is a sort of forcible evangelizing. You turn a Gatling gun on a mob of unarmed 'natives', and then you establish 'the Law', which includes roads, railways and a court-house. He could not foresee, therefore, that the same motives which brought the Empire into existence would end by destroying it."

5. He describes Kipling's coverage of Anglo-India as "tawdry and shallow".

6. But best of all, he explains Kipling's popularity as follows: "The mass of the people, in the [eighteen] nineties as now, were anti-militarist, bored by the Empire, and only unconsciously patriotic. Kipling's official admirers are and were the 'service' middle class, the people who read BLACKWOOD'S [think Limbaugh, in Britain, circa 1900]. In the stupid early years of this century, the blimps, having at last discovered someone who could be called a poet and who was on their side, set Kipling on a pedestal, and some of his more sententious poems, such as 'If', were given almost biblical status. But it is doubtful whether the blimps have ever read him with attention, any more than they have read the Bible. Much of what he says they could not possibly approve. Few people who have criticized England from the inside have said bitterer things about her than this gutter patriot."

Of Orwell's many qualities, his aptitude as an equal opportunity offender was one of his best. And this commentary on Kipling is typically critical of Kipling and numerous others.

So anyways, whilst Bill Kristol suggests that Democrats read Kipling, Orwell pretty clearly suggests you should read Kipling whilst bearing in mind he is a "gutter patriot" and his commentary is "tawdry and shallow". And, he's not very self-aware.

Which begs the obvious question - would it be wrong for us to read Kristol as Orwell read Kipling?

Bobo's lastest dispatch from the Department of Making Shit Up is what this post is about.

(For a measure of how the Times' Op-Ed quality varies, Krugman today is back at the top of his game.)

The opening flourish:

In the 19th century, industrialization swept the world. Many European nations expanded their welfare states but kept their education systems exclusive. The U.S. tried the opposite approach. American leaders expanded education and created the highest quality work force on the planet.

This is incorrect. Or it means that the US adopted parts of the Communist manifesto before Western Europe did.

Anyways, for the sake of argument let's define the welfare state as having three key components - unemployment benefits, universal healthcare, and retirement security.

European welfare states developed in the 20th century, only Germany began to introduce welfare state programmes in the late 19th century under Bismarck ( and curiously they did so to draw a contrast with a "warfare state"). Take Britain for example - Lloyd George's early 20th century government was the first to implement welfare state programmes there.

Universal healthcare is a 20th century phenomenon - in Britain, the Attlee government introduced this in 1946.

Anyways, the point is Bobo's opening flourish on the birth of the welfare state is complete shit.

He is wrong on education too. Britain's state education system evolved in the 19th century (1833 and 1870 were the watershed years in England). As I indicated, you can make a case that Marx was driver for these changes - given one of the 10 planks of the Communist Manifesto was free education for all children at the expense of the state - but the key point is Europe was beginning to invest in education right at the time Bobo tells you they weren't.

Anyways, based on his wildly inaccurate opening flourish, Bobo makes his next grand statement:

That quality work force was the single biggest reason the U.S. emerged as the economic superpower of the 20th century. Generation after generation, American workers were better educated, more industrious and more innovative than the ones that came before.

"Single biggest reason"... Er, right. How's about it's the single best explanation you can find to fit your bullshit argument?

"better educated, more industrious and more innovative"... Better educated - perhaps. More industrious - who knows (if he means more productive, he'd be correct but he should say so). More innovative - no. If the last point were correct, we would see the rate of change of productivity increasing over time. It has not and does not. In reality, it's the nearest thing to a random walk.

"That progress stopped about 30 years ago." What? St Ronald applied the brakes? Jokes aside, Bobo's trends are a figment of his imagination so deciding where they end are just as much of a game of make-believe.

"As well-educated boomers retire over the next decades, the quality of the American work force is likely to decline."

Why? Who said anything about regression in overall worker productivity? Progress in education (assuming that correlates with increasing productivity which it doesn't) according to Bobo has stagnated, but unless it has reversed, Bobo is arguing against his own diagnosis.

"Mitt Romney captured the consequences in his withdrawal statement: “I am convinced that unless America changes course, we will become the France of the 21st century".

Not much wrong with the French education system. There's plenty to criticize about the French economy, but the education system remains excellent. To recap then: Bobo has argued progress in American education has stagnated, therefore the quality in the workforce has declined, thus we could turn out like France (whose workforce is highly educated).

We're not yet half-way through.

But bless him, he is now providing free campaign advice for Republicans...

- Where economic and social policy advocacy seamlessly form quadruple mixed metaphors, such as "a poisonous spiral of economic stress and cultural decay."

- Where classic Republican patrio gobbledy-gook follows on from more phantom diagnostics - "college affordability [is the] least important explanation for why so many students don’t complete college. The real reasons are that students are academically unprepared and emotionally disengaged. National service should be a rite of passage for 20-somethings, and these volunteers could mentor students through high school and college years."

- Where new social programmes are great ideas except paying for them is a non-starter. And the Laffer curve still rules the world - "portable health insurance and retraining accounts would give adult workers security. Income taxes are not going to be coming down, but they need to stay where they are. As Edward Prescott has shown, higher taxes mean less work, and less work means less worker development."

And the reason for the all round awesomeness of Bobo's ideas - "Republicans do believe, or at least should, that positive government can help prepare people for the rigors of competition".

Well then, I guess when St Ronald said - " The nine most terrifying words in the English language are: 'I'm from the government and I'm here to help'" - he was obviously just full of shit. Perhaps this explains why Bobo honors him weekly in the way he does.