Peter Krupa

From the most excellent Baseline Scenario:

… yes, bankers are like athletes. Their individual contributions are overrated relative to their supporting environments; they are overpaid; they are paid based on where they randomly fall in the probability distribution in a given year; and paying a lot for bankers is no guarantee that your bank will be successful in the future. Team sports, like banking, are an industry where the employees capture a large proportion of the revenues. And one with negative externalities, like upsurges in domestic violence around major sporting events. Neither one should be a model for our economy.

I have this thing where I watch commercials on American television and I say to myself: There must be something wrong with Americans. This is one of those commercials.

It reminds me of the part in Idiocracy where, 500 years in the future, Luke Wilson learns that modern medicine is extinct because researchers wasted all their time and money finding cures for erectile disfunction and hair loss.

I guess add “inadequate eyelashes” to that list.

Fox News continues to polish its reputation for sophisticated thought and intellectual rigor by signing on Sarah Palin as a contributor. No word yet on whether she’ll be teaming up with Mike Huckabee for a special Alaska episode of his Praise the Lord Hodown Conservative Variety Show Hour Thing.

Yesterday, Chávez made the remarkable move of devaluing the Venezuelan currency – the bolivar – by 50% against the dollar. One dollar used to be officially worth 2.15 bolivares. Now it’s worth 4.3. Fundamentally, this will be very painful for Venezuela’s withering middle class.

Because Venezuela imports nearly everything it consumes, and importers will now be buying dollars from the government for twice as many bolivares as before, the street bolivar price of nearly everything will simply have to go up, by a lot. The price of everything, that is, except food and medicine, the exchange rate for which Chávez is wise enough to continue subsidizing at 2.15 bolivares per dollar.

So the poor (Chávez supporters) remain happy because the prices of the basics they buy don’t change. The rich are not happy, but they’ve got their dollar accounts and properties outside of Venezuela. And the middle class – well, the middle class gets screwed, because their bolivar savings are now worth significantly less, traveling internationally now costs twice as much, and buying anything domestically other than the basics for life is about to become hellishly expensive.

Venezuelans are lining up to buy stuff before prices skyrocket. They thought last year’s 26.9% annual inflation was bad…

Ask any taxi driver in Latin America who he’s going to vote for and he’ll probably say, “El menos malo.” The least bad one. The lesser of two evils. Lots of people say this in Costa Rica as well. That doesn’t mean you should put it in a campaign advertisement.

Luis Fishman was a late-in-the-game replacement for his party’s nomination for the presidential elections. The prior nominee had to be replaced when he was sentenced to prison for taking bribes the last time he was president, meaning that, at least in this context, Fishman is indeed el menos malo.

Fishman is polling in the low single digits for the February voting, and somehow I don’t see ads like this whipping the electorate up into a frenzy.

If there were ever a scandal made for headline writers:

The sex scandal that has transfixed Northern Ireland in recent days has a cinematic echo: a 60-year-old Mrs. Robinson who was caught in an affair with a man who was 19 at the time, and is now at the center of a scandal that threatens to bring down the power-sharing government that has steered the province out of 30 years of sectarian bloodshed.

From the New York Times:

… as the administration moves to increase oversight within [Immigration and Customs Enforcement] , the documents show how officials — some still in key positions — used their role as overseers to cover up evidence of mistreatment, deflect scrutiny by the news media or prepare exculpatory public statements after gathering facts that pointed to substandard care or abuse.

As one man lay dying of head injuries suffered in a New Jersey immigration jail in 2007, for example, a spokesman for the federal agency told The Times that he could learn nothing about the case from government authorities. In fact, the records show, the spokesman had alerted those officials to the reporter’s inquiry, and they conferred at length about sending the man back to Africa to avoid embarrassing publicity.

The Supreme Court is poised to strike down restrictions on corporate campaign money that have been in place since Watergate. The case - Citizens United v. Federal Election Commission – appears to hinge on freedom of expression and whether corporations and other non-breathing entities deserve the same first amendment rights as people.

At stake is the way in which democracy is conducted in the United States. Allowing corporations to aim multi-million-dollar negative advertising cannons at any candidates who displease them will fundamentally change the rules of the game.

Bill Moyers did an excellent show on this case back in September, in which he interviewed lawyers for both sides. There is, indeed, a solid legal argument to be made in favor of the first amendment, and free speech veteran Floyd Abrams makes it well to Bill Moyers.

But free speech does come with limits. Trevor Potter, the other side of the coin, argues that corporations are entities designed to care about one thing: Making money. And they’re very good at it, which is fine. Real people, however, care about a lot of things – religion, education, foreign policy, criminal justice. It does not benefit society to give so much license to immensely wealthy, artificial entities whose interests are by definition so narrow.

Apparently the case had been brought on some rather narrow grounds, but last year the Supremes sent it back for re-argument, which, as I understand it, is a good indication that they’re about to drop some sort of constitutional bombshell. Whatever happens, the New York Times reports that a combination of court rulings and FEC gridlock mean that campaign finance restrictions have already been worn down to a nub.

Get ready for a fun election year.

In The Crash of 2008 and What it Means, George Soros makes the most eloquent critique of globalization that I’ve ever read.

In a nutshell, he argues that starting in the 70s, rich countries forced Washington consensus austerity measures on poor (“periphery”) countries, while at the same time reserving for themselves the right to enact countercyclical measures to keep their own markets stable and attractive for investment.

The status of the U.S. dollar as a reserve currency coupled with this globalization of financial markets allowed the more attractive markets of rich countries (in particular the United States) to suck in the savings of the less-stable “periphery” markets, generating large current account deficits – that is, we borrowed heavily to spend beyond our means and fuel our prosperity.

This finally catches up to the rich countries. A series of government bail-outs starting in the 1980s coincided with the rise of “market fundamentalism,” the result being broad deregulation of financial markets coupled with a massive, throbbing moral hazard.

Now, the super-bubble has popped, and your average American is screwed. In addition, Soros predicts a prolonged move away from the dollar as a global reserve currency, ending the unlimited line of global credit that the United States has enjoyed over the last 30 years.

The “market fundamentalism” that Soros refers to is the orthodoxy that unregulated financial markets tend toward equilibrium. He places it alongside several other fundamentalist philosophies that ultimately ended badly: communism, national socialism, and  fascism.

He might have a point. We’ll see.