Spengler:

The rush out of the Egyptian pound is so rapid that Egyptian investors refuse to hold debt in their own national currency, even at a 16% yield. After Islamist parties won more three-quarters of the seats in recent parliamentary elections – 47% for the Muslim Brotherhood and 25% for the even more extreme al-Nour Party – the business elite that prospered under military rule is counting the days before exile. The first reports of actual hunger in provincial Egyptian towns, meanwhile, are starting to trickle in…

It seems unlikely that Egypt’s central bank will be able to prevent a banana-republic devaluation of the Egyptian pound, and a sharp rise in prices for a population of whom half barely consumes enough to prevent starvation. The difference between Egypt and a banana republic, though, is the bananas: unlike the bankrupt Latin Americans, who exported food, Egypt imports half its caloric consumption. Meat imports have already fallen by 60% over the past year…

Nearly half of Egyptians are functionally illiterate. Nine-tenths of adult women have suffered genital mutilation. Almost a third of Egyptians marry first or second cousins, the fail-safe indicator of a clan-based society. Half of Egyptians live on less than $2 a day, and must spend half of that on food…It should have been no surprise that the Islamists swept the parliamentary elections, given the desperation of the people and the cupidity of the political system. The Wafd Party, Egypt’s oldest secular political entity, polled just 9% of the vote.

Delusional as it was to expect Egyptians to support secular liberal parties that never existed and offered no solution to their desperation, it is all the more delusional to expect the Islamists to stabilize Egypt. The Islamist victory in the first round of voting last year almost certainly prompted the jump in capital flight in December, and the consolidation of Islamist power. Egypt’s middle class will leave and tourism, down by a third over the past year, will virtually disappear

We saw this sort of thing coming a year ago. But the wise ones said, “to be in Tahrir Square tonight, to feel the energy and pride of a people taking back the keys to their country and their future from a tired old dictator, was a privilege.”

A modest lede from CBS: “A military judge has recommended no time in confinement for a Marine sergeant.” The underlying story can’t have been such a big deal, but then why then did it take seven years to adjudicate? (Bruce Kesler has been covering this story since it began so long ago in 2005. It looked pretty fishy to us too, way back when.) Again, why such a long time to get to a conclusion? Among other things, a US congressman went on the record in November 2005: “they killed innocent civilians in cold blood.” And the clock began to tick.

Gallup asked an open-ended question in a poll:

As you can see, almost no one — a mere 2% of those polled — thinks income inequality is a priority compared to the economy generally. Here’s why:

Want to be a leveler? Good luck with that.

Robert Samuelson discusses why the Fed failed to see the housing bust coming:

Hardly anyone asked whether lax mortgage lending would trigger a broad financial crisis, because America had not experienced a broad financial crisis since the Great Depression. A true financial crisis differs from falling stock prices, which are common. A financial crisis involves the failure of banks or other institutions, panic in many markets and a pervasive loss of wealth and confidence. Such a crisis was not within the personal experience of members of the FOMC — or anyone. Nor was it part of mainstream economic thinking. Because it hadn’t happened in decades, it was assumed that it couldn’t happen. There had been previous real estate busts. From 1964 to 1966, new housing starts fell 24 percent; from 1972 to 1975, 51 percent; from 1979 to 1982, 39 percent; from 1988 to 1991, 32 percent. Declining home construction had fed economic slowdowns or recessions. So the natural question seemed: Would this happen now? The answer seemed “no”…

There’s a paradox to economic policy. The more it succeeds at prolonging short-term prosperity, the more it inspires long-run destabilizing behavior by businesses, banks, consumers, investors and government. If they think basic stability is assured, they will assume greater risks — loosen credit standards, borrow more, engage in more speculation, relax wage and price behavior — that ultimately make the economy less stable. Long booms threaten deep busts. Since World War II, this has happened twice. In the 1960s, the so-called “new economics” promised that, by manipulating the budget and interest rates, it could stifle business cycles. The ensuing boom spanned the 1960s; the bust extended to the early 1980s and included inflation of 13 percent, four recessions and peak monthly unemployment of 10.8 percent. The latest episode was the so-called Great Moderation, largely paralleling Greenspan’s Fed tenure (1987-2006), when there were only two mild recessions (1990-91 and 2001). We are now in the bust. The Fed slept mainly because it overlooked the possibility of boom-bust.

(We certainly did not understand what was happening when we first noticed the sub-prime mortgage market in early 2007. Nor did we understand it well when the Bear Stearns conference call tanked the market in August of that year.) We think there’s another factor that was in play as well: computer models. Recall that the largest investment banks were allowed to write their own capital rules at this time by the government, because they were so smart and had very sophisticated computer models showing that they had excess capital even at ratios as low as 4-5%. GIGO as it turned out.

The guy is up for parole. No kidding.

Since at least the time of Rick Santelli’s Tea Party rant, we have been witnessing some seismic changes in American politics. Independents flipped by 33 points in 2010 after all. But to many of the powers that be, it’s as though that never happened. Flash forward to the extraordinary GOP primary season. Candidate after candidate has surged and they have been characterized in their turn by the punditry and the media as the latest anti-Romney. That characterization misses the point. In our view the Republican primary voters have been sending a clear message that has has not varied all that much, though the vessels for the message have come and gone.

The latest vessel is Newt Gingrich, obviously flawed in many ways. But take a moment to read what he’s saying. It’s less the messenger than the message that has the power. We think that GOP primary voters believe that a minimally acceptable candidate articulating that message clearly and unapologetically is electable by a sizeable majority of voters. After all, in the wake of the ridiculous Keystone decision, even staunch liberals are shaking their heads about the disastrous course the administration has set for the country. We don’t recall a recent analogy to this bubbling up of opinion from the grass roots. (Eugene McCarthy’s strong losing performance in the 1968 New Hampshire primary comes to mind.) If the insiders don’t quite get what is going on, it wouldn’t be the first time.

Charles Murray in the WSJ:

To illustrate just how wide the gap has grown between the new upper class and the new lower class, let me start with the broader upper-middle and working classes from which they are drawn, using two fictional neighborhoods that I hereby label Belmont (after an archetypal upper-middle-class suburb near Boston) and Fishtown (after a neighborhood in Philadelphia that has been home to the white working class since the Revolution).

To be assigned to Belmont, the people in the statistical nationwide databases on which I am drawing must have at least a bachelor’s degree and work as a manager, physician, attorney, engineer, architect, scientist, college professor or content producer in the media. To be assigned to Fishtown, they must have no academic degree higher than a high-school diploma. If they work, it must be in a blue-collar job, a low-skill service job such as cashier, or a low-skill white-collar job such as mail clerk or receptionist.

People who qualify for my Belmont constitute about 20% of the white population of the U.S., ages 30 to 49. People who qualify for my Fishtown constitute about 30% of the white population of the U.S., ages 30 to 49. I specify white, meaning non-Latino white, as a way of clarifying how broad and deep the cultural divisions in the U.S. have become. Cultural inequality is not grounded in race or ethnicity. I specify ages 30 to 49 — what I call prime-age adults — to make it clear that these trends are not explained by changes in the ages of marriage or retirement. In Belmont and Fishtown, here’s what happened to America’s common culture between 1960 and 2010.

Marriage: In 1960, extremely high proportions of whites in both Belmont and Fishtown were married — 94% in Belmont and 84% in Fishtown. In the 1970s, those percentages declined about equally in both places. Then came the great divergence. In Belmont, marriage stabilized during the mid-1980s, standing at 83% in 2010. In Fishtown, however, marriage continued to slide; as of 2010, a minority (just 48%) were married. The gap in marriage between Belmont and Fishtown grew to 35 percentage points, from just 10.

Single parenthood: Another aspect of marriage — the percentage of children born to unmarried women — showed just as great a divergence. Though politicians and media eminences are too frightened to say so, nonmarital births are problematic. On just about any measure of development you can think of, children who are born to unmarried women fare worse than the children of divorce and far worse than children raised in intact families. This unwelcome reality persists even after controlling for the income and education of the parents. In 1960, just 2% of all white births were nonmarital. When we first started recording the education level of mothers in 1970, 6% of births to white women with no more than a high-school education — women, that is, with a Fishtown education — were out of wedlock. By 2008, 44% were nonmarital. Among the college-educated women of Belmont, less than 6% of all births were out of wedlock as of 2008, up from 1% in 1970.

Industriousness: The norms for work and women were revolutionized after 1960, but the norm for men putatively has remained the same: Healthy men are supposed to work. In practice, though, that norm has eroded everywhere. In Fishtown, the change has been drastic. (To avoid conflating this phenomenon with the latest recession, I use data collected in March 2008 as the end point for the trends.) The primary indicator of the erosion of industriousness in the working class is the increase of prime-age males with no more than a high school education who say they are not available for work — they are “out of the labor force.” That percentage went from a low of 3% in 1968 to 12% in 2008. Twelve percent may not sound like much until you think about the men we’re talking about: in the prime of their working lives, their 30s and 40s, when, according to hallowed American tradition, every American man is working or looking for work. Almost one out of eight now aren’t. Meanwhile, not much has changed among males with college educations. Only 3% were out of the labor force in 2008…

“The more opulent citizens take great care not to stand aloof from the people,” wrote Alexis de Tocqueville, the great chronicler of American democracy, in the 1830s. “On the contrary, they constantly keep on easy terms with the lower classes: They listen to them, they speak to them every day.” Americans love to see themselves this way. But there’s a problem: It’s not true anymore, and it has been progressively less true since the 1960s.

From the WSJ a couple of years ago: “the CDC reported that about 40% of American children were born out of wedlock in 2007, more than triple the 11% who were in 1970.” It seems clear enough to us that the government has to stop subsidizing this sort of behavior or fairly soon the country will be in an even bigger mess than it is now.

A few days ago, Mitt Romney was ahead in SC, and it was all about Saul Alinsky versus Gordon Gekko, but it turned out that Newt Gingrich won handily. Here’s some of what he had to say (we could not find a transcript of Gingrich’s victory speech in South Carolina, so we essentially created one below):

So many people who are so concerned about jobs, about medical costs, about the everyday parts of life, and who feel that the elites in Washington and New York have no understanding, no care, no concern, no reliability, and in fact do not represent them at all.

In the last two debates we had…where people reacted so strongly to the news media, I think it was something very fundamental that I wish that the powers that be in the news media would take seriously. The American people feel that they have elites who have been trying for a half century to force us to quit being American and to become some kind of other system, and the reaction…People completely misunderstand what’s going on. It’s not that I am a good debater, it’s that I articulate the deepest held views of the American people…

If Barack Obama can get reelected after this disaster, just think how radical he would be in a second term…there are a number of key issues we have to talk about with the President. I believe this campaign comes down to economics, including jobs, economic growth, balancing the budget, the value of money, comes down to national security, what threatens us and what to do about it, but the centerpiece of this campaign is about American exceptionalism versus the radicalism of Saul Alinsky…

What we are going to argue is that American exceptionalism, the Declaration of Independence, the American Constitution, the American Federalist Papers, the Founding Fathers of America are the source from which we draw our understanding of America. He draws his from the Saul Alinsky, the radical left-wingers, and people who don’t like the classical America…

One of the keys issues, and I’m prepared to take this straight to the President and frankly, straight to the elite media…is the growing anti-religious bigotry of the elites…The second big theme that every South Carolinian understands is jobs, economic growth…I want to go into every neighborhood of every ethnic background in the country and say to the people very simply, if you want your children to have a life of dependency and food stamps, you have a candidate and that’s Barack Obama. If you want your children to have a life of indepedency and paychecks, you have a candidate and that’s Newt Gingrich…

Part of our long-term security interests is having an American energy policy. I want America to become so energy independent that no American President ever again bows to a Saudi King. Let me give you an example of a common sense conservatism that solves problems. You have well over $29 billion of natural gas offshore. As President I will authorize on the very first day the development of it. That natural gas will create jobs that, in Louisiana, average $80,000 apiece. In addition, it generates royalties. Part of the royalties should be used to modernize the port of Charleston, which affects 1 out of every 5 jobs in South Carolina.

But it’s not enough just to find the money. The Corps of Engineers bureaucracy is so long and so stupid that they currently take 8 years to study, not to do the project but to study the project. We fought the entire Second World War in 3 years and 8 months. Now if you can beat Nazi Germany, fascist Italy and Imperial Japan in 3 years and 8 months, it is almost unimaginable that it now takes 8 years to study the project…

The President’s decision to veto the Keystone pipeline…you have to wonder how out-of-touch with reality this administration is…The President says, no, we don’t want you to build a pipeline from central Canada straight down, with no mountains intervening, to the largest petrochemical center in the world, Houston, so that we would make money on the pipeline, we would make money on managing the pipeline, we would make money on refining the oil, and we would make money in the ports of Galveston and Houston shipping the oil.

Oh no, we don’t want to do that because Barack Obama is taking care of his extremist left-wing friends in San Francisco. They think that will really stop the oil from getting out. No. Prime Minister Harper…is going to cut a deal with the Chinese, and they will build a pipeline straight across the Rockies to Vancouver. We will get none of the jobs, none of the energy, none of the opportunity. An American President who can create a Chinese-Canadian partnership is truly a danger to this country.

Gingrich certainly owes a great deal to the much-reviled media, and possibly to Romney’s mishandling of his tax issue. More surprises ahead no doubt, but even Romney partisans know that important changes are needed, and quick.

A Yahoo report from the UK, where there are so many fascinating stories:

Beck Laxton, 46, and partner Kieran Cooper, 44, have spent half the decade concealing the gender of their son, Sasha. “I wanted to avoid all that stereotyping,” Laxton said in an interview with the Cambridge News. “Stereotypes seem fundamentally stupid. Why would you want to slot people into boxes?…Sasha dresses in clothes he likes — be it a hand-me-downs from his sister or his brother. The big no-no’s are hyper-masculine outfits like skull-print shirts and cargo pants.

In one photo, sent to friends and family, Sasha’s dressed in a shiny pink girl’s swimsuit. “Children like sparkly things,” says Beck. “And if someone thought Sasha was a girl because he was wearing a pink swimming costume, then what effect would that have?”…

When Sasha turned five and headed to school, Laxton was forced to make her son’s sex public. That meant Sasha would have to get used to being a boy in the eyes of his peers. Still, his mom is intervening. While the school requires different uniforms for boys and girls, Sasha wears a girl’s blouse with his pants.

Makes us want to play matchmaker. Look, almost anything’s better to comment on than the drip, drip, drip of the primary season, or the appalling situation in Washington.

The Washington Post’s editorial board discusses Keystone:

Obama’s Jobs Council reminded the nation that it is still hooked on fossil fuels, and will be for a long time. “Continuing to deliver inexpensive and reliable energy,” the council reported, “is going to require the United States to optimize all of its natural resources and construct pathways (pipelines, transmission and distribution) to deliver electricity and fuel.” It added that regulatory “and permitting obstacles that could threaten the development of some energy projects, negatively impact jobs and weaken our energy infrastructure need to be addressed.” Mr. Obama’s Jobs Council could start by calling out…the Obama administration…

We almost hope this was a political call because, on the substance, there should be no question. Without the pipeline, Canada would still export its bitumen — with long-term trends in the global market, it’s far too valuable to keep in the ground — but it would go to China. And, as a State Department report found, U.S. refineries would still import low-quality crude — just from the Middle East. Stopping the pipeline, then, wouldn’t do anything to reduce global warming, but it would almost certainly require more oil to be transported across oceans in tankers.

WaPo columnist Robert Samuelson is a little less diplomatic:

rejection of the Keystone XL pipeline from Canada to the Gulf of Mexico is an act of national insanity. It isn’t often that a president makes a decision that has no redeeming virtues and — beyond the symbolism — won’t even advance the goals of the groups that demanded it…environmentalists won’t get much. Stopping the pipeline won’t halt the development of tar sands, to which the Canadian government is committed; therefore, there will be little effect on global warming emissions. Indeed, Obama’s decision might add to them. If Canada builds a pipeline from Alberta to the Pacific for export to Asia, moving all that oil across the ocean by tanker will create extra emissions. There will also be the risk of added spills…

consider how Obama’s decision hurts the United States. For starters, it insults and antagonizes a strong ally; getting future Canadian cooperation on other issues will be harder. Next, it threatens a large source of relatively secure oil that, combined with new discoveries in the United States, could reduce (though not eliminate) our dependence on insecure foreign oil.

Finally, Obama’s decision forgoes all the project’s jobs. There’s some dispute over the magnitude. Project sponsor TransCanada claims 20,000, split between construction (13,000) and manufacturing (7,000) of everything from pumps to control equipment. Apparently, this refers to “job years,” meaning one job for one year. If so, the actual number of jobs would be about half that spread over two years. Whatever the figure, it’s in the thousands and important in a country hungering for work. And Keystone XL is precisely the sort of infrastructure project that Obama claims to favor.

The big winners are the Chinese. They must be celebrating their good fortune and wondering how the crazy Americans could repudiate such a huge supply of nearby energy.

Speaking of China, Chairman Mao wanted people to put steel mills in their back yards. Very practical. In the new fantasy America we have now, everyone should put a Solyndra in their back yards, and there should be personalized high-speed rail service connecting every home in the country,

Daily Mail:

The lesbian parents of an 11-year-old boy who is undergoing the process of becoming a girl last night defended the decision, claiming it was better for a child to have a sex change when young. Thomas Lobel, who now calls himself Tammy, is undergoing controversial hormone blocking treatment in Berkeley, California to stop him going through puberty as a boy…The mothers say that one of the first things Thomas told them when he learned sign language aged three — because of a speech impediment — was, ‘I am a girl’. At age seven, after threatening genital mutilation on himself, psychiatrists diagnosed Thomas with gender identity disorder…This summer, he started taking hormone-blocking drugs…Tammy Lobel’s hormones are being blocked by an implant on the inside of the 11-year-old’s upper left arm, which must be replaced once a year. Ms Moreno explained: ‘In other words, she will stay as a pre-pubescent boy until she decides and we feel that she can make this decision about surgery.’

As VDH noted recently, civilizations often devolve. Exhibit A above. Unlike 50 years ago, we now live in a world where smoking a cigarette can get you in trouble, but this abusive freak show doesn’t.

Henry Adams reflected on changes in America in about 1904: “The American boy of 1854 stood closer to the year 1 than to the year 1900.” Charles Eliot commented on the range of knowledge among some Americans in 1854: “We are accustomed to seeing men leap from farm or shop to court-room or pulpit, and we half believe that common men can safely use the seven-league boots of genius.” Those days are long gone.

As VDH says, and as we have written as well, Americans don’t know much about the world that existed in the days of Adams and Eliot. The world seems magic now, because of technology; it hardly was magic back then.

The ignorance is not just sad, it’s actually perilous. To take a mundane example, technology has permitted the elimination of inventory everywhere in the global supply chain. How large are the buffer inventories of gasoline, fruits and vegetables, meat, canned goods, and so forth, in case some serious disruptions should occur? A month or two, like the SPR? What happens when the gas and the cheeseburgers run out after that?

Charles Eliot advocated a new curriculum in higher education that focused on specialization. This time in our view would benefit by more respect for the generalist of 1854. It is colossally arrogant to think that there will not be a breakdown in the supply chain at some point. And the consequences of arrogance are not pretty. If there’s a Plan B for the US in such a crisis, we haven’t heard of it. And offshoring so much of America’s needs to foreign lands heightens the risks in our perilous present.

Malcolm Muggeridge:

the dreadful infection of journalism got into my system. Turning aside from the honorable occupation of teaching, I started writing articles about the wrongs of the Egyptian people, how they were clamoring, and rightly so, for a democratic setup, and how they would never be satisfied with less than one man one vote and all that went therewith…That at least was what I wrote in my articles, and they went flying over to England, and, like homing pigeons, in through the windows of the Guardian office in Manchester, at that time a high citadel of liberalism. That was where the truth was being expounded, that was where enlightenment reigned.

Of course that was in the 1920′s, but you can find the same sort of thing today.

Charleston wants to deepen its port by 5 feet. George Will:

The first container ship reached Charleston in 1966, carrying 600 containers. Today the port receives ships carrying more than 9,000. By 2014 there will be 1,200 “post-Panamax” ships — marvels of naval architecture, floating mountains — built for commerce after the canal widening. They will carry up to 18,000 containers. The widening, says Jim Newsome, CEO of the South Carolina State Ports Authority, will be “the biggest game-changer in the history of containerization”…70 percent of imports from Asia arrive at West Coast ports and are distributed inland by truck and rail. But shipping is the cheapest transportation per mile and will become cheaper with post-Panamax ships, including those coming here.

Newsome says the study for deepening Savannah’s harbor was made in 1999. It is 2012, and studies for the environmental impact statement are not finished. When they are, the project will take five years to construct. “But before that,” he says laconically, “they’re going to be sued by groups concerned about the environmental impact.” A Newsome axiom — that institutions become risk-averse as they get challenged — is increasingly pertinent as America changes from a nation that celebrated getting things done to a nation that celebrates people and groups who prevent things from being done.

Newsome says that because of labor costs — in constructing and crewing ships — America has essentially no deep-sea shipping industry. This is a facet of the de-industrialization of the nation.

The world’s tallest building took 14 months to build in 1930 in NYC. Now the same task takes at least 10x as long in NYC — if they’re lucky. How pathetic.

Some of the following thoughts were originally written five years ago, before the mortgage-backed securities, credit default swaps and a certain vicious cycle almost brought down the banking system in the wake of the disastrous decision to let Lehman Brothers fail. With the subsequent (profitable) bank bailouts in 2008, the US dodged a bullet that it did not in 1930, when a recession became a depression. Letting the banks fail was the great folly at the onset of the great depression. It’s not just our contention. Read the Milton Friedman excerpt below.

Many years ago we had the good fortune to meet a man who was present as a child at one of the precipitating events of the Great Depression, the failure of New York’s Bank of the United States in December 1930. His grandfather, who lost his savings in that bank, took him to witness the scene as depositors thronged to bank doors that were locked during normal business hours. The panic from bank failures in New York and elsewhere spread around the country — there was no deposit insurance — driving banks to maximize liquidity, sell assets, foreclose loans, and create the Mother of All Credit Crunches, which became known as the Great Depression. Here’s how the NYT described the scene in its December 12, 1930 city edition:

Perhaps you have been taught that the stock market crash of 1929 caused the Great Depression. That is not so. The crash both reflected and amplified the recession that the US economy was entering in 1929; however, it was the problems of the banking system and of monetary policy that cascaded recession into depression. We will quote from Friedman and Schwartz’s Monetary History of the United States (from pp. 309-313):

The stock market crash…left no mark on currency held by the public. Its direct financial effect was confined to the stock market and did not arouse any distrust of banks by their depositors.

The stock market crash coincided with a stepping up of the rate of economic decline. During the two months from the cyclical peak in August 1929 to the crash, production, wholesale prices, and personal income fell at annual rates of 20%, 7.5%, and 5%, respectively. In the next twelve months, all three series fell at appreciably higher rates…Even if the contraction had come to an end in late 1930 or early 1931, as it might have done in the absence of the monetary collapse that was to ensue, it would have ranked as one of the more severe contractions on record….

In October 1930, the monetary character of the contraction changed dramatically…A crop of bank failures, particularly in Indiana, Illinois, Iowa, Arkansas, and North Carolina, led to widespread attempts to convert demand and time deposits into currency…A contagion of fear spread among depositors…such contagion knows no geographical limits. The failure of 256 banks with $180 million in deposits in November 1930 was followed by the failure of 352 with over $370 million of deposits in December…the most dramatic being the failure on December 11 of the Bank of the United States with over $200 million of deposits.

That failure was of especial importance. The Bank of the United States was the largest commercial bank, as measured by volume of deposits, ever to have failed up to that time in US history. Moreover, though an ordinary commercial bank, its name had led many at home and abroad to regard it as somehow an official bank, hence its failure constituted more of a blow to confidence than would have been administered by the fall of a bank with a less distinctive name.

In addition it was a member of the Federal Reserve System. The withdrawal of support by the Clearing House banks from the concerted measures sponsored by the Federal Reserve Bank of New York to save the bank — measures of a kind the banking community had often taken in similar circumstances in the past — was a serious blow to the System’s prestige…

Friedman implies that the reason that the Clearing House banks failed to bail out the Bank of the United States, despite often intervening in other, similar cases, is that the BoUS’s customer base and board were Jewish. This contention seems to be supported by statements from the NY State Banking Commissioner of that time, Joseph A. Broderick (p. 310). Let’s take a look at how the New York Times reported the attendees of the meeting the day before the Clearing House pulled the plug on the Bank of the United States:

We have no way of knowing if Milton Friedman’s contention is true or not, though it appears likely to us that, unlike Herbert H. Lehman, the “small, able” Mr. Isidor J. Kresel was probably not a member of Our Crowd. TIME Magazine summed up the banking community’s view of the Bank of the United States in its December 22, 1930 issue on that fateful meeting:

Another late arrival was lanky Owen D. Young who came about 11 p.m. in full dress, accompanied by Thomas William Lamont of J. P. Morgan & Co. Looking taller than usual in his full dress, Mr. Young paused to peer down at and converse with small, able Isidor Kresel, counsel for Bank of United States…Conservative Manhattan bankers last week were angry at Bernard K. Marcus, dark-haired, heavily-built president of Bank of United States. His aim was perhaps much too high. Only last year he stated: “Often we’ve put two or three days work into one. We have gone ahead two or three times as fast as we would have had we been working only one day at a time.” To bankers, a day’s work is a day’s work, to be done well, thoroughly.

(The tall and lanky in full dress versus the small, able, dark-haired, overreaching, and heavily-built. We get the picture. Thanks, TIME.) This piece has been quite educational to research. We see once again that great events can turn on small episodes of human weakness, prejudice and folly. And who knew at the time that a crowd gathered at a bank on a cold December day would become anything other than the “local” event that the head of the NY Clearing House opined that it would be?

We should not believe that we can’t make mistakes of similar magnitude or wrongheadedness again. The stagflation of the 1970′s was caused by foolish economics policies of three presidents in a row — Nixon, Ford, and Carter — that weren’t reversed for a decade until Ronald Reagan and Paul Volcker had the wisdom and courage to take the harsh steps required to kill inflation. The greatest folly can seem trivial or reasonable at the time, which is precisely why it is so dangerous. Fortunately, even many of the people who rhetorically blast TARP today, chose to back it when push came to shove.

AP:

“China is expecting foreign trade growth to slow this year to around 10 percent amid a grim outlook for exports…Last year, China’s foreign trade grew 22.5 percent to $3.6 trillion…exports in December rose 13.4 percent, down slightly from November’s growth rate.” And from Bloomberg, “Growth may ‘trough’ at 7.5 percent in the three months through March and 7.6 percent in the second quarter.”

As China’s growth slows, the problems will become more obvious. The overleverage problem. The housing bust. The political fissures. The issues that PPP obscures. The urban unemployment problem. The regional governments problem. The empty cities problem. Stay tuned.

NYT:

When the companies that supply motor fuel close the books on 2011, they will pay about $6.8 million in penalties to the Treasury because they failed to mix a special type of biofuel into their gasoline and diesel as required by law…the ingredient, cellulosic biofuel, does not exist…while it may seem harsh that the Environmental Protection Agency is penalizing them for failing to do the impossible, the agency is being lenient by the standards of the law, the 2007 Energy Independence and Security Act…

The goal set by the law for vehicle fuel from cellulose was 250 million gallons for 2011 and 500 million gallons for 2012. (These are small numbers relative to the American fuel market; the E.P.A. estimates that gasoline sales in 2012 will amount to about 135 billion gallons, and highway diesel, about 51 billion gallons.)

Note the date: 2007. It’s a bi-partisan clownfest, raising costs and complicating business in service of a trivial amelioration of an imaginary problem. Fortunately, there’s not a single shred of evidence that over-regulating the private sector hurts job creation.

IBD:

According to the BLS, the “labor force participation rate” — the ratio of the number of people either working or looking for work compared with the entire working-age population — is now 64%, down from 65.7% when the recession ended in June 2009. That’s the lowest level since women began entering the workforce in far greater numbers several decades ago. If you adjust for this drop, the unemployment rate would be close to 11%, instead of the official 8.5%.

Of course this has been the case for a long time now. Imagine how the media would be reporting unemployment, and indeed, will be reporting unemployment, if the White House changes hands this year.

VDH:

Obama made several recess appointments — a tactic that as a senator he once criticized — even though Congress was not in recess. In December, the president signed a $1 billion omnibus spending bill, but notified Congress that he might not abide by some of the very provisions he had just signed into law. During the Libya war, Obama felt that bombing Qaddafi’s forces did not really constitute military operations, and therefore he had no need to notify Congress under the War Powers Act. It is clear that Arizona is not trying to circumvent federal immigration law, but rather is desperately trying to find some way to enforce it, given that the Obama administration has selectively chosen not to do so. In response, the federal government is suing the state of Arizona, even as it assures illegal aliens that they will not be arrested if they have not committed a crime — as if Obama can by himself decide that illegally entering and residing in the United States is not a federal crime in the first place. President Obama argued that it was constitutional to force citizens to purchase federalized health care, and that all Americans would be subject to his new health-care law — except some 2,000 businesses and organizations that were given politically driven waivers. Obama decided to reverse the legal order of creditors in the bailout of a bankrupt Chrysler Corporation in favor of more politically suitable constituencies. The administration does not like the Defense of Marriage Act, and therefore announced that it won’t enforce it. When a federal judge struck down an Obama- administration ban on new leases for gas and oil drilling in the Gulf of Mexico, Obama for a time ignored the injunction. When a BP oil leak in the Gulf outraged America, the president met with company executives and announced that they had agreed to set up a $20 billion “fund” to pay for imminent damage claims — as if our chief executive now meets with culpable private businesses to assess what he thinks they should pony up to avoid federal retaliation…

on any given challenge Obama assesses the politics of favoring his constituency of the “poor” and “middle class,” and then uses the necessary legal gymnastics post facto to offer the veneer of lawfulness. If someone is breaking a federal “law” by entering Arizona illegally from Mexico, there must be a way to make the enforcer of that “law” the real suspect — given that a Sheriff Joe Arpaio is by allegiance of the privileged 1 percent and those whom he arrests most surely are not. Consumers are deemed to need federal help more than do lenders; accordingly, Congress “really” is now in recess. In other words, we are witnessing with this administration the ancient idea of the supposedly exalted ends justifying the somewhat ambiguous means — albeit dressed up in trendy Ivy League legalese and progressive moralizing. Our postmodern president is not content with just picking and choosing which laws he will follow in advancing his social agenda. The war against the myth of disinterested Western jurisprudence extends also to free-market economics, as we see with the monotonous demonization of the so-called 1 percent and those who make over $200,000 per year. Sometime after January 2009, we learned that the “wealthy” did not gain their riches by a wide variety of what we once thought were legitimate means — luck, inheritance, work, health, intelligence, expertise, experience, education, or an overriding desire for money and status, coupled with an avoidance of classical sins like sloth, crime, and drunkenness. Rather, we were taught that there was something else going on, something innately unfair in the manner in which we are arbitrarily compensated. In some sense, we are back to the old notion of a labor theory of value (e.g., an hour of working at Starbucks is inherently no less valuable to our society in terms of how much the worker should be paid than an hour crafting a deal at Goldman Sachs). The role, then, of government is not to ensure an equality of opportunity — which is impossible, given inherent and unending race, class, and gender exploitations — but to strive for an equality of result. That utopian task demands that the best and the brightest in government redistribute capital, or rather use the state to make right what the private sector has distorted.

And this from the head of one of our political parties: “The discourse in America, the discourse in Congress in particular…has really changed, I’ll tell you. I hesitate to place blame, but I have noticed it take a very precipitous turn towards edginess and lack of civility with the growth of the Tea Party movement.” Already, “the Department of Homeland has been operating a ‘Social Networking/Media Capability’ program to monitor the top blogs, forums and social networks online for at least the past 18 months.” Hard to imagine what 2013-2017 America is going to look like if these folks aren’t shown the door.

A campaign website:

STAND AGAINST “ZEROING OUT” AID TO ISRAEL Republican candidates for president Mitt Romney, Rick Perry, and Newt Gingrich all say they would cut foreign aid to Israel — and every other country — to zero. Stand up to this extreme isolationism and join the call to reject the Romney-Perry-Gingrich plan.

How very odd, and from this guy’s team to boot.