Happy Saint Patrick’s Day, everyone. Hope it has been a good one. Yesterday, I had a tale in my Impromptus column. I had been to Harvard, to conduct a couple of interviews, and I waxed nostalgic.
In Widener Library, there are bag-checkers — people checking your bags on your way out. Ages ago, there was this bag-checker who, frankly, was pretty gruff. Man of about 65, I would say. One day, Saint Patrick’s Day, I had a nice exchange with him. He was wearing a kelly-green jacket. I complimented him on it. He said that his late wife had given it to him. His eyes filled with tears.
On Saint Patrick’s Day, I can’t help thinking of Ed and Margie Capano. Ed is our former publisher. Every March 17, he and his wife, Margie, would hold a little celebration at a pub here in Manhattan. Don’t be entirely fooled by “Capano” — his mother was a Kennedy. And Margie’s maiden name was Gallagher.
Do you know what Dolly, in Hello, Dolly!, says? Everyone thinks she’s a classic yenta. But she introduces herself very clearly as “Dolly Levi, born Gallagher.” She also dances a jig in the show and says “me darlin’s.”
Finally, I give you “Danny Boy” — one of the finest songs ever thought of, sung by our finest singer of that song today: a man with an Italian last name like Ed’s, Matthew Polenzani. Go here. Great voice, great singer, great guy.
Yesterday, the Human Rights Foundation hosted an event they called “PutinCon” — a conference devoted to the Russian “president,” Vladimir Putin: his rise and his deeds, both at home and abroad. Participating were both Russians and well-wishing foreigners. It was, above all, a day of truth-telling — a festival of truth amid many lies and much obfuscation as concerns the Putin regime.
Many people in the West, I think, would rather turn away from Putin and not know. Because knowing would entail doing, or acting — and that, people shrink from, as one can well understand. We had a long cold war. Why engage in another conflict, even at a much lower level?
As in the Cold War, many people blame neocons and others for stirring up trouble. Why can’t we all get along? Why do we have to “poke the bear” (to use Nigel Farage’s phrase) when the bear would just live peacefully beside us, if only we refrained from poking?
The problem is, he won’t. The bear won’t. Putin keeps trying to tell us this, but we’re reluctant to listen.
I have done a podcast with two of the speakers at PutinCon — two men well known to readers of National Review: Bill Browder and Vladimir Kara-Murza. The latter is the democracy leader who has twice been poisoned and has twice survived. Naturally, we talk about Putin’s latest poison attacks in Britain. We also talk about the sham of an election that Putin will stage tomorrow.
Why is he going through this charade? Like gangsters with money and power, dictators crave respectability. Putin, like his fellows, wants a democratic veneer.
A name was to be on the ballot tomorrow: that of Boris Nemtsov. He was the leader of the opposition. Yet he was murdered three years ago, about 200 yards from the Kremlin wall. His name will not appear on the ballot. Neither will that of Alexei Navalny, the anti-corruption activist who is now the main opponent of Putin. They haven’t killed him yet. But they have barred him from running.
Vladimir Kara-Murza worked alongside Boris Nemtsov. Nemtsov was his closest friend, and the godfather of one of his children. Last month, Kara-Murza spoke at the unveiling of Boris Nemtsov Plaza, outside the Russian embassy in Washington.
You may remember that, during the Reagan years, we named the street outside the embassy “Andrei Sakharov Plaza.”
In our Q&A, Kara-Murza repeats to me what he said at the ceremony last month:
“When Sakharov Plaza was named — this was in 1984 — the Soviet government, as you can well imagine, was not pleased. Seven years later, there was a Sakharov Avenue in Moscow, and there was no longer a Soviet government. To me as a Russian citizen, there’s nothing more patriotic than to name a street in front of the Russian embassy in honor of a Russian statesman, and whatever the people in the Kremlin think of this now, I know that one day the Russian state will be proud that our embassy in Washington is standing on a street named after Boris Nemtsov.”
Bill Browder is the financier who flourished in Russia and then was declared persona non grata — he had gotten under the skin of Putin’s oligarchs. He made it out of Russia, but his lawyer did not. That was Sergei Magnitsky, a fearless whistleblower, who was arrested, imprisoned, and tortured to death.
From that moment on, Bill Browder has been a crusader for justice. He has spearheaded “Magnitsky acts,” which impose sanctions on persecutors in Russia.
He could have taken another path. He could have put Russia behind him as a dark, weird chapter. He could have put his feet up in London and counted his millions. Done a little reading. Yachted about the world. Instead, he has put himself in the crosshairs of one of the most brazen and murderous governments on earth.
Why? Why the hell? This is what Browder said to me yesterday:
“I’m doing this for Sergei Magnitsky. Sergei Magnitsky died in my service. He effectively died as my proxy, and the burden of guilt, the burden of responsibility I feel to him is overwhelming, and has been since the day I learned of his death at 7:25 a.m. on the 17th of November , and I owe it to his memory and to his family and to myself to carry on with this campaign till I’ve really, truly gotten justice for Sergei Magnitsky.”
Again, to hear this Q&A — divided between Bill Browder and Vladimir Kara-Murza — go here.
The Republican primary in the Illinois gubernatorial race has largely been characterized by incumbent Bruce Rauner refusing to confront his challenger Jeanne Ives, including in public debates.
The only time the two candidates faced off was in front of the Chicago Tribune editorial board in late January, during which Ives successfully put the sitting GOP governor on defense about his failure to push through conservative policy during his time in office.
According to one report from the Chicago Tribune, Ives asked Rauner during the conversation whether he would take part in another Republican debate ahead of the March 20 primary.
“We’re debating right now,” Rauner replied. That’s one way to say no.
Given the way Ives was able to best Rauner on the issues in front of the editorial board — a setting that tends to invite policy conversation rather than typical debate cheap-shots and one-liners — it isn’t surprising that the governor has spent the rest of the primary campaign avoiding facing her again.
The Wall Street Journal has a story today about the ties between President Trump’s trade adviser, Peter Navarro, and the biggest steel company in the U.S. — Nucor Corp. It is particularly interesting in light of the stiff steel tariffs successfully pushed by Navarro, which he championed ever since he joined the administration.
Nucor paid $1 million in 2011 to the Utility Consumers’ Action Network, a nonprofit that advocates on behalf of utility customers in San Diego County, Calif., which in turn paid Mr. Navarro’s production company to make the film, according to documents reviewed by The Wall Street Journal. . . .
The movie chronicles the erosion of the U.S. manufacturing base and China’s rise as an industrial power since the 1990s. Mr. Navarro co-wrote a book by the same name that was published in 2011. In the movie, Tom Danjczek, then-president of the Steel Manufacturers Association, points to the problem of Chinese steel overproduction due to government subsidies.
Dan DiMicco, who was chief executive of Nucor from 2000 to 2012, said the company paid for the film through the San Diego nonprofit at Mr. Navarro’s request.
As the Journal documents:
Mr. Navarro is now a top trade adviser in the White House, with a growing public profile for his get-tough views on trade. His connection with Nucor underscores the wide-ranging, historic ties between Mr. Trump’s top trade advisers and the U.S. steel industry, which stands to benefit from tariffs the Trump administration recently imposed.
Commerce Secretary Wilbur Ross, a Wall Street veteran, spent more than $1 billion to purchase distressed steel firms and assembled them into a new company, International Steel Group Inc., which he sold for $4.5 billion to the London-based Mittal family in 2004, The Wall Street Journal reported at the time. He served on ArcelorMittal’s board until becoming commerce secretary last year.
Gilbert Kaplan, Mr. Trump’s nominee as undersecretary for international trade at the Commerce Department, is a former steel-industry lobbyist. U.S. Trade Representative Robert Lighthizer represented American steel companies as a lawyer in private practice before his current turn as the government’s top trade negotiator. The USTR’s nominated deputy, Jeffrey Gerrish, and his general counsel, Stephen Vaughn, lobbied on trade laws for U.S. Steel Corp.
These strong ties between Trump officials and the steel industry should raise some questions about recent policy decisions that will overwhelmingly benefit the industry and that economists agree will hurt Americans’ welfare.
Also, these twoposts by George Mason University professor Donald Boudreaux are worth reading as they are correcting inaccurate claims made by Navarro on CNBC recently about trade and the impacts of tariffs.
One of the biggest intellectual jousting matches last year was between Duke history professor Nancy MacLean, who wrote a slimy, dishonest book about Nobel Prize–winning economist James Buchanan and the whole limited-government movement, and the many scholars who blasted holes in it. If it had been a boxing match, the referee would have stopped it in the first round. MacLean had no defense, and she immediately resorted to ad hominem attacks on her many critics, including some honest leftists.
Like Hillary Clinton, she just won’t quit, and recently made some more nasty comments about Buchanan and those of us who oppose big government. For that, she has earned another pummeling, and I write about it in today’s Martin Center piece.
Some may recall that another Duke professor was hounded away after saying that he thought a “diversity training” program that had been scheduled would be a waste of time. But other than a petition by a number of students asking the school to rebuke her for her “autism explains libertarianism” comment, MacLean has skated smoothly by. Double standards are on display.
With the Illinois primary elections mere days away, incumbent GOP governor Bruce Rauner is still slinging attacks at primary challenger Jeanne Ives.
The governor’s latest ad has been denounced as inaccurate by several local political analysts. Among other charges, Rauner’s ad claims that Ives is a “lackey” of Illinois’ speaker of the house, Michael Madigan, a prominent Democrat who has been a party leader on the left for decades.
Rauner’s attempts to fend off Ives’s conservative challenge have largely centered around this theme, repeatedly calling the state legislator “Madigan’s Favorite Republican,” despite the fact that Rauner’s policies as governor have hewn much more closely to the Democratic party than anything Ives has proposed or supported.
As Chicago Tribune columnist Eric Zorn noted earlier this week, media commentators have called the governor’s latest attack ad “the most inaccurate” and “perhaps the most ludicrous” of the campaign season, as well as “a lie, wrapped in a prevarication, enveloped with deception, packaged in falsehood and bound up with a fabrication.”
Zorn’s column goes on to explain the specific instances of dishonesty compiled in Rauner’s latest ad, all of which involve taking Ives’s remarks out of context or misrepresenting legislation she has supported at the state Capitol. Here is one example that Zorn uses to illustrate the unfairness of Rauner’s attacks:
Claim: “Ives even defends Madigan.”
The commercial cuts to a video clip of Ives saying, “I don’t think that’s any way to deal with the powerful speaker of the House, Mike Madigan,” during a joint interview with Rauner at the Tribune Editorial Board. A different Rauner commercial, one that calls Ives “another Madigan lackey,” shows a clip from that same session in which Ives says Rauner is “picking on Mike Madigan again.”
Truth: Ives was not defending Madigan in these clips but criticizing Rauner’s intemperate, immature and highly unsuccessful attempts to browbeat Madigan into submission by calling him names. Rauner’s 3½-year record of failure and futility — an unblemished 0-for-44 on his “turnaround agenda” goals — shows that he has no idea how to deal with Democratic majorities in the General Assembly and that re-electing him promises more of the same.
At the height of the influx of refugees into Germany in 2015–17, there was little doubt that mixed among the worthy cases were economic migrants taking advantage of the chaos to seek their fortunes in Europe. Perhaps out of instinctive pro-immigrant sentiment, Germany’s Left obscured the difference. Its Right, writes Graeme Wood in a new article for The Atlantic, focused on some of the putative refugees’ “loose relationship” with the truth of their circumstances in order to delegitimize the whole lot.
One interpretation of the right’s stance, Wood writes, was that the conservatives were, essentially, racist — indeed, this has been the dominant interpretation on the left. “But many conservatives,” he reports, “say they view refugees as a threat to order, not a threat to culture.” And that’s where Germany’s bureau of refugee detectives comes in. The Federal Office for Migration and Refugees, or BAMF, which Wood visited, has the task of sorting real sob stories from crocodile tears. By hiring thousands of new staff and implementing new procedures and technologies, BAMF could start to convince Germans — in typical bureaucratic fashion — that order has not broken down. “Attitudes may improve toward refugees and other migrants if the process becomes credible,” Wood writes, “and the public learns to trust it and not worry about being tricked. ‘Wir schaffen das’ is a much more effective slogan when the thing we can supposedly do is a task of clearly limited size.”
Limiting that task, Wood explains, is delicate operation. It means sorting out the real refugees from the liars. And so far, of the applications from 2015 and 2016 that the government has reviewed, about a third have been rejected.
For its part, BAMF has several tools for ferreting out the truth. Its facial-recognition software and massive database gets around the problem that 60–80 percent of asylum seekers arrive without a passport (a number that seems linked in part to the fact, Wood writes, that a passport constrains one’s story). “Think of all the times the government snaps your photo: at the airport or the DMV, when you apply for a visa or get thrown in jail. If a man who shows up at the Austrian border has the same face, but not the same name, as a man who applied for a visa in Cairo five years ago, BAMF knows something is amiss.”
BAMF also checks refugees’ stories against their cellphone metadata to see if their locations match up. And there are language tests. A BAMF employee can have the applicant call a number and speak in his or her purported “native” language for two minutes. The computer on the other end will return a verdict about how natively the applicant is, in fact, speaking.
Can BAMF’s sophisticated techniques and technologies lend greater legitimacy to Germany’s refugee process, and to that of other market democracies? It’s certainly worth a try. I can’t say I agree with Wood in every respect. In particular, I don’t think he gives the case for immigration restriction its due. He conflates concerns about the ability of aging societies to assimilate large numbers of newcomers with racial prejudice, which strikes me as a mistake. Yet he is right to observe that a chaotic immigration system saps faith in government institutions, and that this poses dangers all its own.
I’ve been writing, somewhat sympathetically, about the nationalist movements in Hungary and Poland for some time, as I find most of the journalism about these nations to be pretty poor. Intelligent people say things about these that are plainly untrue all the time now, for instance, that there is no press freedom, or that fascism is ascendant in these nations. Neither is true. But events change, and people change, and so should our assessments. Something happened in Budapest yesterday that probably doesn’t surprise people who believed in the caricature, but it did surprise me.
Yesterday Viktor Orbán, the nationalist leader of Hungary, gave a blistering speech during an event that was part commemoration of Hungary’s exit from the Hapsburg Empire, and part campaign rally for Orbán and his party Fidesz, who are facing an election three weeks from now.
The political context: Fidesz commands the support of half of the country, maybe more. The largest opposition party, Jobbik, is fascist. Jobbik’s support occasionally cracks through into the high teens but rarely breaks through. Liberal greens, Communists, and a few other parties are below that. My own excursion into Hungary and my interviews there led me to believe that “populist” was a bit of a misnomer for Orbán’s party. They represent a portion of the country that is doing rather better than those who support Jobbik.
Orbán’s history and his evolution as a political figure is a story I want to tell at length at another time. But even liberal Hungarians, like the novelist Tibor Fischer, have been inclined to defend him from the worst smears, for instance the charge of anti-Semitism. It was Orbán who made denial of the Holocaust a crime. It was Orbán’s government who financed the Oscar-winning film Son of Saul about the death camp at Auschwitz. Orbán basked in the success of the film, even as fascists in Hungary denounced it as “Jewish propaganda.” The House of Terror Museum, which his government helped found and funds, documents the fascist persecution of Jews, and Stalin’s purge of Jews in Hungary’s state apparatus.
And I myself have heard Jewish community leaders in Budapest give praise to the government — not unqualified — but praise nonetheless. I’ve heard them note wryly on the side that, unlike in Paris, Jewish synagogues and community centers in Budapest need no protection from machine-gun toting soldiers and metal detectors. This is an undisguised endorsement of the government’s position against mass migration. (Although, even here, there is a longer and more complicated story to tell.)
All this is to say that I was surprised and scandalized, by a section of Orbán’s speech yesterday. He pounded on themes of Hungary’s national survival, appropriate to the occasion, and a constant in national histories. And, I can squint and see the raw political logic for making George Soros the adversary he campaigns against. The opposition parties in Hungary are nincompoops, non-entities, and outright fascists. Orbán wants to punch up, not down. And Soros does indeed have a vision for governance at odds with Orbán’s, and Soros vigorously fights for it. But the section of Orbán’s speech against George Soros reads like a litany of anti-Semitic cliches. A friend’s translation of the relevant section is below:
Dear Ladies and Gentlemen! I know that this struggle is difficult for all of us. I understand if some of us are even scared. It is understandable because our opponent is different than we are. Not straightforward, but hiding, not direct but crafty, not honest but base, not national but international, doesn’t believe in labour rather speculates with money, has no country of its own because he feels the world is his in its entirety. Not generous but avenger and always attacks the heart, especially, if the heart is colored red-white-and-green. But dear friends, we have always known that the stakes are high. Hungarian history has made us accept that we have to fight for things which are a given for more fortunate nations. Here it is enough that we make one wrong step, enough to have one clumsy government, bad election results once, and everything we have fought for so hard is lost. This is one draughty part of the world here, where history doesn’t give us a break even though we feel like we’ve deserved it already. Our ancestors have said it right: “a cowardly people doesn’t deserve a country”. And we have summoned our courage whenever we needed to. It was never easy. Just look at the statues here, at this square! Count Andrássy was sentenced to death by the Austrian emperor, Rákóczi prince died in exile, Kossuth was forced to leave the country, István Tisza was shot by communists. It never came easy, but in the end, we always prevailed. Eventually we sent home the sultan with his janissaries, the Habsburg emperor with his soldiers, the Soviets with their comrades and now we are sending home uncle Gyuri [a nickname for “George”] together with his network. We ask you to go back to America, make the Americans happy, not us! [Emphasis mine.]
One thing I learned in Hungary is that Viktor Orbán is an intelligent man. It would not be difficult for him to come up with different language for opposing George Soros’s political ambitions. He has done so in the past. And it is impossible to believe he does not know the provenance of the rhetoric above, which comes out of the darkest parts of European history, and Hungary’s history.
Orbán has often pitted “globalists” and “speculators” against those with national loyalties who work before. Many Hungarians do feel like their national wealth has been robbed of them, and they have good reason to feel this way. (And this, by the way, is a reason to criticize Orbán’s own forms of cronyism, also.) But this speech reads like a checklist drawn from the Protocols of the Elders of Zion. Nothing can justify reintroducing this into European political life. It’s dishonorable to use language like this, and dangerous. I can’t even conjure a base political goal for this language. It will not drain support from fascists. And it will incense his opponents in Western Europe, as it incenses me. To follow my own advice on fairness, I am putting out some inquiries to Jewish members of the Fidesz government. If they will speak to me about it, I’ll update this space.
Today, the Human Rights Foundation is holding its “PutinCon” in New York. This is a one-day conference devoted to the Russian “president”: his origins, his rise, his deeds (both at home and abroad). Serving as chairman of PutinCon is Garry Kasparov, once the world’s chess champion, now a freedom-and-democracy champion.
We are told, always, that Putin is popular in Russia. He apparently doesn’t think so. He does away with his political opposition (sometimes permanently). He forbids a free press. He forbids genuine elections. This is not the behavior of a man who is confident of his popularity.
Dictators are traditionally afraid of their own people. Why shouldn’t they be? They know, as much as anybody, that they are illegitimate. So they use the apparatus of oppression to stay on top.
Today, I have many items in my Impromptus column. One of them is about Egypt, where a military dictator named Abdel-Fattah el-Sissi rules. According to a report out of Cairo, Sissi “has waged a massive crackdown on dissent in recent years, and authorities have ratcheted up pressure ahead of the March 26-28 election, in which he faces no real challenge.”
If he faces no real challenge, why does he ratchet up pressure? That’s what dictators do. They can never be too sure. They run scared. The report continues, “All potentially serious competitors either withdrew under pressure or were arrested, leaving only el-Sissi and a little-known politician who supports him.”
Yes, this is classic. Putin has an “election” this Sunday. He arranged for an opponent named Ksenia Sobchak, a reality-TV star known as “the Paris Hilton of Russia.” (Unlike reality-TV stars in America, she is unlikely to make it to the top.) Years ago, Arafat allowed an opponent called “Umm Khalil” — a grandmother who was no challenge to him.
I have studied a few dictators over the years, and what impresses me is how similar they are to one another — whatever the continent, whatever the nationality, whatever the tongue.
Rallying the folks, Viktor Orbán was playing some familiar music. Do you recognize it? “We are fighting an enemy that is different from us. Not open but hiding; not straightforward but crafty; not honest but base; not national but international; does not believe in working but speculates with money; does not have its own homeland but feels it owns the whole world.”
(For Shaun Walker’s report in the Guardian, go here.)
Are Orbán’s words innocent? I doubt it. He studied at Pembroke College, Oxford (on a Soros scholarship). He knows European history better than most of us. He does not speak accidentally.
To many on the American right, Orbán is a hero. They lionize him as a champion of Christendom. I understand this, and so can anyone: Radical Islam has made appalling inroads in Europe, and many of the traditional parties are indifferent to it or weak on it. Orbán looks like a tell-it-like-it-is savior.
Some of his fans are unaware of the broader picture; some of them are perfectly aware. This morning on Twitter, I saw an interesting comment.
Reacting to Orbán’s latest statement, a man wrote, “Well, sh**. This is disappointing. I’d hoped it wasn’t like this. I’d hoped our press coverage of central Europe was as biased as coverage of the Tea Party.”
Again, understandable. In any event, Orbán is getting blunter, it seems to me, or more transparent. He is getting harder to make excuses for or explain away.
And I think that we conservatives are at a time for choosing: the politics of Orbán et al. or the politics of Reagan et al. Both, you cannot have. The straddle looks weird and starts to hurt.
About every two months, there are rumors that Gen. H. R. McMaster might be let go as Trump’s national-security adviser (along with many other stellar appointees).
The world, however, is a much more logical and predictable place than it was 14 months ago. We’ve restored ties to the Gulf monarchies; Israel is again treated with respect. There is no talk any more of an ascendant ISIS caliphate. Ukrainians have been armed; Putin has had tighter sanctions slapped on him. NATO-member defense expenditures are up 5 percent. The U.S. military is being rebooted. Controversial moves, such as leaving the Paris climate accords and moving the U.S. embassy to Jerusalem, are no longer controversial and are winning a consensus that such moves were overdue. The existential threat of a North Korean nuclear missile with the potential to hit the West Coast that was dropped on the nation last year is being dealt with through stepped up efforts to recalibrate missile defense, regional allied solidarity, historically tough U.N. sanctions, and a restored U.S. deterrence, rather than the old talk, talk, talk/give, give, give protocol of the “Agreed Framework,” “Six-Party Talks,” and “Strategic Patience” failures of the last 30 years.
The general doctrine of the National Security Council’s strategic blueprint — principled realism — is more or less a euphemism for the restoration of deterrence. Perhaps it is now less likely that Iran will send missiles in the direction of U.S. warships or take American sailors hostage or that U.S. diplomats in hostile countries will be subject to hearing loss. Much of that turnabout has been due, in various ways, public and private, to Trump’s national-security team of Mattis-Haley-Pompeo — and McMaster — who all have tried to define Trump’s Jacksonianism as an approach that is neither Obama recessional nor Bush-era preemptory nation-building. The appointment of Mike Pompeo at State solidifies that team.
On the principle that failure is punished and success rewarded, it makes no sense to lose someone integral to such progress, much less to chronically leak a wrongheaded move that would disrupt a successful team on the eve of dealing with both the North Korean threat and the various surreal side agreements and absurd protocols of the flawed Iran nuclear deal.
ICYMI, Thursday’s links are here, and include the Ides of March, a history of hair transplants, what antibiotics are made of, shoe rationing in the U.S. during WWII, and, since Stephen Hawking died on Einstein’s birthday, the Hawking vs Einstein rap battle.
Lawrence Kudlow’s appointment to be director of the National Economic Council has brought out the critics, who have combed through his copious writings to find every wrong call he has made over the decades.
One passage that has come in for some ridicule, though, doesn’t deserve it. Here’s Kudlow, writing in November 2007:
Too much is being made of both the sub-prime credit problem and the housing downturn. A recent Bank of England study shows that residential mortgage-backed securities in the U.S. total $5.8 trillion. Of that, only $700 billion, or 12 percent, are sub-prime. Even when you add in $600 billion of so-called Alt-A mortgage paper, most of which will not default, the total of these home loans is still less than 20 percent of all mortgage-backed paper.
What’s more, the entire market in sub-prime debt is just 1.4 percent of the global equity markets. On any given day, a 1.4 percent drop in world stocks would erase the same amount of value as the collective markdown of all sub-prime-backed bonds to $0. It’s just not that big a deal.
An extremely strong consensus has formed that Kudlow was wrong about this: that subprime mortgages led to a housing meltdown, financial crisis, and severe recession. But the consensus is wrong.
What the housing-centric view underemphasizes is that the housing bust started in early 2006, more than two years before the economic crisis. In 2006 and 2007, construction employment fell, but overall employment continued to grow, as did the economy generally. Money and labor merely shifted from housing to other sectors of the economy.
This housing decline caused financial stress by sowing uncertainty about the value of bonds backed by subprime mortgages. These bonds served as collateral for institutional investors who parked their money overnight with financial firms on Wall Street in the “shadow banking” system. As their concerns about the bonds grew, investors began to pull money out of this system.
In retrospect, economists have concluded that a recession began in December 2007. But this recession started very mildly. Through early 2008, even as investors kept pulling money out of the shadow banks, key economic indicators such as inflation and nominal spending — the total amount of dollars being spent throughout the economy — barely budged. It looked as if the economy would be relatively unscathed, as many forecasters were saying at the time. The problem was manageable: According to Gary Gorton, an economist at Yale, roughly 6 percent of banking assets were tied to subprime mortgages in 2007.
It took a bigger shock to the economy to bring the financial system down. That shock was tighter money. . . .
It was against this backdrop of tighter money that the financial stress of 2007 turned into something far worse in 2008. With nominal spending falling at the fastest rate since the Depression, households, businesses and banks all had incomes lower than they had expected. That made servicing debts and paying wages harder than expected. It also lowered asset values, since those were premised on expected streams of future income.
And, of course, the crashing economy made the housing crisis worse, too. That’s why the standard account of the crisis took hold. It’s true, after all, that housing fell and then, along with the economy, plummeted. Untangling cause and effect is tricky. But the timeline is a better match for the theory that the Fed is to blame. The economy started to tank not right after housing began to fall, but right after money tightened.
We could have had a decline in housing without a Great Recession. That’s what we went through for two years. What we could not have had without a Great Recession was a decline in nominal spending. If it had cut rates faster, or merely refrained from talking up future rate increases, the Fed might have kept that decline from happening or at least moderated it. Australia had a housing boom and debt bubble, too, but kept a steadier monetary policy. The consequence was a mild correction, but nothing like our Great Recession.
I have no idea whether Larry agrees with this analysis. But from my standpoint, the main thing he got wrong in 2007 was failing to predict the severity of the monetary-policy mistakes of 2008. And I would not judge this mistake too harshly because even in retrospect, so few people see those mistakes and their import clearly.
Yesterday, the Human Rights Foundation hosted an event they called “PutinCon” -- a conference devoted to the Russian “president,” Vladimir Putin: his rise and his deeds, both at home and abroad. Participating were both Russians and well-wishing foreigners. It was, above all, a day of truth-telling -- a ...
The Republican primary in the Illinois gubernatorial race has largely been characterized by incumbent Bruce Rauner refusing to confront his challenger Jeanne Ives, including in public debates.
The only time the two candidates faced off was in front of the Chicago Tribune editorial board in late January, during ...
Last October, the U.S. House passed the Pain-Capable Unborn Child Protection Act, which prohibits abortions after 20 weeks of pregnancy based on scientific evidence that fetuses can feel pain at this stage of development.
The bill passed by a 237–189 vote; all but three Democratic representatives voted ...
The Wall Street Journal has a story today about the ties between President Trump's trade adviser, Peter Navarro, and the biggest steel company in the U.S. -- Nucor Corp. It is particularly interesting in light of the stiff steel tariffs successfully pushed by Navarro, which he championed ever since he joined the ...
As I can fathom neither endlessness
nor the miracle work of deities,
I hypothesize, assume, and guess.
The fact that I love
you and you love me
is all I can prove
and proves me.
— This poem appears in the April 2 print issue of National Review.
The Senate on Wednesday passed a bill that would roll back parts of Dodd-Frank. The vote was 67–31, with 17 members of the Democratic caucus breaking party lines. If the legislation passes the House and is signed, it will be the largest change to the controversial financial-reform package since it became law in ...
Editor’s Note: Every week, Michael Brendan Dougherty writes an “Off the Shelf” column sharing casual observations on the books he's reading and the passing scene.
In this space last week, I was sharing some grim German history, and this week I jumped into two books I’ve been promising myself I’d ...
Over at The Atlantic, Michael Gerson, a former George W. Bush speechwriter, has penned an extended essay that attempts to explain a complex and disturbing reality — how Evangelicals “became an anxious religious minority seeking political protection from the least traditionally religious president in living ...
‘I’ve had a lot of bad ideas in my life,” former U.N. ambassador Samantha Power tells Politico. “Though none as immortalized as that one.”
Wow. It’s a major concession. And what might “that one” be?
Not standing idly by in the White House while Iranians protested a fixed election in 2009, then ...