Coyote Blog

Proponents of tougher immigration enforcement often use crime as their big scare factor in trying to influence people to their point.  Only tougher laws and Joe Arpaio, they caution, stand athwart the coming immigrant rape of Phoenix.

But when the case is built on one or two high-profile crime where the perpetrator has not even been identified, rather than statistics, we can be suspicious of how strong the case is.  I have cited historical figures here, but the WSJ has the new figures for 2009:

Violent crime fell significantly last year in cities across the U.S., according to preliminary federal statistics, challenging the widely held belief that recessions drive up crime rates.

The incidence of violent crimes such as murder, rape and aggravated assault was down 5.5% from 2008, and 6.9% in big cities. It fell 2.4% in long-troubled Detroit and plunged 16.6% in Phoenix, despite a perception of rising crime that has fueled an immigration backlash….

In Phoenix, police spokesman Trent Crump said, “Despite all the hype, in every single reportable crime category, we’re significantly down.” Mr. Crump said Phoenix’s most recent data for 2010 indicated still lower crime. For the first quarter of 2010, violent crime was down 17% overall in the city, while homicides were down 38% and robberies 27%, compared with the same period in 2009.

Arizona’s major cities all registered declines. A perceived rise in crime is one reason often cited by proponents of a new law intended to crack down on illegal immigration. The number of kidnappings reported in Phoenix, which hit 368 in 2008, was also down, though police officials didn’t have exact figures.

And just to head off the obvious straw man, 2008 was not somehow a peak year, it was actually well below historical levels.

Repeat after me:  There is nothing wrong, immoral, evil, or even unsavory about short-selling.  No one gets mad at you for selling an over-valued security which you actually own, so there should be no ethical difference in selling an over-valued security you don’t actually own.  Somehow people who are traditionally long in the market (e.g. corporate executives) have convinced the world that short-sellers should be vilified.  I don’t understand it.  If you love the stock and short-sellers drive it down, you should treat it as a gift that the stock you love can now be bought more cheaply.

So I thought this was particularly awesome:

On Oct. 8 and 9, 2008—as the Federal Reserve was bailing out American International Group Inc.—an account Sen. Isakson held invested more than $30,000 in ProShares UltraShort 7-10 Year Treasury and UltraShort 20+ Year Treasury, the records show. These are “leveraged short” funds, designed to gain $2 for each $1 drop in the daily value of U.S. Treasury bonds.

Isakson claims he was not actively managing the account, a claim that is probably true given the ethics rules in Congress (not that anyone follows those).  My response in his place would have been, “F*cking-A right I was shorting government bonds.  Haven’t you been paying attention over the last 12 months?”

Unfortunately, Isakson falls out of my hero category into my “hypocritical goat” category for this:

In February, Sen. Johnny Isakson (R., Ga.) argued on the Senate floor that “we don’t need those speculating in the marketplace to take unfair advantage of the values of equities that are owned by Americans all over this country for the sake of making a buck on a short sale.”

Again this unaccountable bias that somehow people who are long are morally superior, and somehow more entitled, than people who are short.

Ht Radley Balko

Conservatives often attack global warming alarmists for using individual outlier events at the tails of the normal distribution (e.g. Katrina) to fan panic about climate change.  So it is interesting to see them doing the same thing themselves on immigrants and crime in Arizona.  [sorry, forgot the link to Expresso Pundit]

Of course, the whole story fell apart when Wagner had to introduce this fact.

While smugglers have become more aggressive in their encounters with authorities, as evidenced by the shooting of a Pinal County deputy on Friday, allegedly by illegal-immigrant drug runners, they do not routinely target residents of border towns.

Sure, that’s the ticket, violence hasn’t increased in actual border towns…of course, roving drug smugglers just used an AK 47 to gun down a deputy in PINAL County a hundred miles north of the border.  But other than that…and the rancher they killed last month…the border towns themselves are pretty calm.

Excuse me, but has anyone on any side of the immigration debate ever claimed that immigrants have never committed a crime?  Forget for a minute that the guilty parties in these two cases are mere supposition without any charges filed yet — particularly the case of the rancher last month.  In 2008 there were about 407 killings in the state.  So, like, one a month were maybe by immigrant gangs and this is a crisis?

From the link above, I looked up AZ and US crime states in 2000, 2005, and 2008.  I was too lazy to do every year and 2009 state stats don’t appear to be online yet.  Here is the crisis in Arizona in violent crime rates:

Oh Noz, we seem not only to have drastically reduced our violent crime rate right in the teeth of this immigrant “invasion” but we also have reduced it below the US average.  This actually understates the achievement, since Arizona is more highly urbanized than the average state  (yeah, I know this is counter-intuitive, but it was true even 20 years ago and is more true today).  Urban areas have higher crime rates than rural areas, particularly in property crime as below:

So our property crime rate is high, but not totally out of line from other highly urban areas.  But the real key here is that during this supposed immigrant invasion, again Arizona has improved faster than the national average.  This is seen more clearly when we index both lines to 2000.

One may wonder why climate change alarmists only wave around anecdotes rather than averages.  If we really are seeing more drought or floods, show us the averages.  The problem is that their story can’t be seen in the averages, so they are forced to rely on anecdotes to inflame the population.   The same appears to be true of our Arizona immigration panic.

Update: Some doubts emerge about Pinal County deputy shooting update: or perhaps not

From Steve Chapman:

It’s no surprise that Arizonans resent the recent influx of unauthorized foreigners, some of them criminals. But there is less here than meets the eye.

The state has an estimated 460,000 illegal immigrants. But contrary to myth, they have not brought an epidemic of murder and mayhem with them. Surprise of surprises, the state has gotten safer.

Over the last decade, the violent crime rate has dropped by 19 percent, while property crime is down by 20 percent. Crime has also declined in the rest of the country, but not as fast as in Arizona.

Babeu’s claim about police killings came as news to me. When I called his office to get a list of victims, I learned there has been only one since the beginning of 2008—deeply regrettable, but not exactly a trend.

Truth is, illegal immigrants are less likely to commit crimes than native Americans. Most come here to work, and in their desire to stay, they are generally afraid to do anything that might draw the attention of armed people wearing badges.

El Paso, Texas, is next door to the exceptionally violent Ciudad Juarez, Mexico, and easily accessible to illegal entry. Yet it is one of the safest cities in the United States.

The narrative is that small business credit markets are frozen.  John Stossel argues the facts say otherwise?

More melodramatic prose from today’s Washington Post: “White House moves to free up lending for small businesses.”  ”Unfreeze the markets.” “Free up lending.” Given such language, I would think that loans to small businesses have stopped. The market must be broken, right?

… lending to [small] companies has fallen. Federal data show that lending to small businesses by community banks declined by about $8 billion, or 2 percent, between September 2008 and September 2009.

A decline of two percent. TWO PERCENT. That constitutes a credit “freeze”? Considering the rash of bank failures from 2008 – 2009 due in large part to bad loans made by banks, a decline of two percent in loans to small businesses strikes me as a prudent response.

So does our science-based President address the narrative or the facts?  Here is a hint:  narratives can affect elections, while facts are often ignored.  Therefore, Obama is proposing to use $30 billion of TARP money to so something about the $8 billion drop in small business lending.

This post at Houston Clear Thinkers is just a devastating analysis of Houston light rail.  In it, we see the age-old story — rail is enormously expensive, and starves the rest of the system for money, ultimately leading to fewer people riding at much higher costs.  He quotes from Bill King:

Decline in Ridership. Since 2004, Houston population has grown by over 10% from just over 2 million to 2.25 million. At the same time gas prices rose 47% from $1.81 per gallon to $2.67 per gallon. These two factors should have virtually guaranteed an increase in transit. However, exactly the opposite has occurred as bus boardings dropped almost 24% from 88 million in 2004 to 67 million in 2009. Instead of increasing bus service by 50% as it promised the voters in the 2003 referendum, Metro has slashed bus routes and increased fares by over 50%. Today Metro actually operates 225 fewer buses than it did in 2003. An outside performance audit in 2008 found that on-time performance fell by 29% from 2004 to 2008.

Financial Disaster. Since 2003, Metro’s sales tax revenues have increased by 43%, rising from $357 million to $512 million. At the same time, its fare revenue increased by 41% from $42 million to $60 million by charging an ever dwindling ridership more. Yet, Metro is in the worst financial shape in recent history. At year end 2003 Metro’s current assets exceeded its current liabilities by $125 million. The budget just adopted by the Metro board projects that it will have current accounts deficit of $165 million by the end of this fiscal year, a stunning loss of nearly $300 million in just five years. Over the same period, Metro’s debt has swelled by nearly 50% from $546 million to $816 million. [.  .  .]

In the meantime, the cost of the [Metro’s Light Rail Transit lines] has risen from the $1.2 billion originally estimated to something well in excess of $3 billion. Metro is seeking to borrow $2.6 billion to build the LRT, over four times what it promised the voters would be the limit in the 2003 referendum. Originally, Metro assured voters that it could build the LRT without tapping the mobility payments that are so critical to the Houston and the other member cities. Metro’s projections now show that it can only afford the LRT if those payments are terminated in 2014. [.  .  .]

California high-speed rail advocates are already backpedalling on the numbers, and from experience with other such projects, it will only get worse.

In the face of the state’s perpetual budget crisis, some Californians are beginning to regret their votes in favor of the $9.9 billion high-speed rail bond last year. Even though proponents of the train have now admitted the bond was only a down payment on the actual cost to build the system, the numbers that were projected are changing—and all in the wrong direction.

The business plan released by the train’s advocates last month show the dramatic differences in what the voters were told and what reality is. For example, the price of a ticket from San Francisco to Los Angeles is now projected at $105, up from the previous $55 estimate.  That new number changed the ridership predictions: now 41 million annual riders by 2035, down from last year’s prediction of 55 million passengers by 2030. The cost for building the train system has also grown.  The proponents had been thinking $33.6 billion (2008 dollars) but have revised upward to $42.6 billion.  Recently, the Obama administration announced $2.25 billion in funding for the project. Proponents said federal money would be used to close the gap between the voter-approved bond and the ultimate cost, but
this is a drop in the bucket and still will not work.

Do not expect a true LA to SF high speed rail line for less than $75 billion and the ridership numbers are still absurd, as discussed here.  By the way, Southwest’s advanced fair from LAX to SFO is $114 right now.  If you are willing to go Burbank to Oakland, the fair is $90.

If you want to be depressed today, read Radley Balko’s article in Reason on asset forfeiture.   Despite reforms at the Federal level (which still stop short of justice, in my mind) abusive laws still exist in many states, allowing police departments to seize and keep assets merely on a “probable cause” evidence standard.  The laws are basically a license to steal, as it is almost impossible to reclaim money or property once seized, and police get to keep the money and assets for their own use, so they are going to defend the takings, and the laws that allow the takings, like mother bears.

In a 2001 study published in the Journal of Criminal Justice, the University of Texas at Dallas criminologist John Worral surveyed 1,400 police departments around the country on their use of forfeiture and the way they incorporated seized assets into their budgets. Worral, who describes himself as agnostic on the issue, concluded that “a substantial proportion of law enforcement agencies are dependent on civil asset forfeiture” and that “forfeiture is coming to be viewed not only as a budgetary supplement, but as a necessary source of income.” Almost half of surveyed police departments with more than 100 law enforcement personnel said forfeiture proceeds were “necessary as a budget supplement” for department operations.

Many may remember this case, one of the many Balko reviews:

Tiny Tenaha, Texas, population 1,046, made national news in 2008 after a series of reports alleged that the town’s police force was targeting black and Latino motorists along Highway 84, a busy regional artery that connects Houston to Louisiana’s casinos, ensuring a reliable harvest of cash-heavy motorists. The Chicago Tribune reported that in just the three years between 2006 and 2008, Tenaha police stopped 140 drivers and asked them to sign waivers agreeing to hand over their cash, cars, jewelry, and other property to avoid arrest and prosecution on drug charges. If the drivers agreed, police took their property and waved them down the highway. If they refused, even innocent motorists faced months of legal hassles and thousands of dollars in attorney fees, usually amounting to far more than the value of the amount seized. One local attorney found court records of 200 cases in which Tenaha police had seized assets from drivers; only 50 were ever criminally charged.

One case seems right out of Minority Report:

On February 4, 2009, Anthony Smelley got his first hearing before an Indiana judge. Smelley’s attorney, David Kenninger, filed a motion asking for summary judgment against the county, citing a letter from a Detroit law firm stating that the seized money indeed came from an accident settlement, not a drug transaction. Kenninger also argued that because there were no drugs in Smelley’s car, the state had failed to show the required “nexus” between the cash and illegal activity. Putnam County Circuit Court Judge Matthew Headley seemed to agree, hitting Christopher Gambill, who represented Putnam County, with some tough questions. That’s when Gambill made an argument that was remarkable even for a forfeiture case.

“You have not alleged that this person was dealing in drugs, right?” Judge Headley said.

“No,” Gambill responded. “We alleged this money was being transported for the purpose of being used to be involved in a drug transaction.”

Incredibly, Gambill was arguing that the county could seize Smelley’s money for a crime that hadn’t yet been committed. Asked in a phone interview to clarify, Gambill stands by the general principle. “I can’t respond specifically to that case,” he says, “but yes, under the state forfeiture statute, we can seize money if we can show that it was intended for use in a drug transaction at a later date.”

I guess its lucky they didn’t send the SWAT team in for her, as she might be dead now:

[Victoria] Aguayo has filed a lawsuit in Maricopa County Superior Court, after she was arrested, indicted, and nearly prosecuted for her “role” in the infamous “Desert Divas” prostitution ring.

One problem: Aguayo was not a “desert diva” and the evidence suggesting she was is laughable at best.

On one of the “Desert Divas’” many Web sites, the agency advertised an “escort” named “Tia.” “Tia” is described on the site as being “thin, white, and blonde” and has a tattoo on her stomach that is clearly visible in the topless photo of the “diva” Aguayo’s lawyer was kind enough to send New Times.

Phoenix Police Detective Christie Hein identified Aguayo as “Tia” based on the photo on the Web site when she arrested her on August 28, 2008, the lawsuit claims.

We’ve seen pictures of both “Tia” and Aguayo and we gotta say if Aguayo can be identified as “thin, white, and blonde,” so can Aretha Franklin.

Aguayo is — to put it politely — more of a “plus-sized” woman, she’s black, and is missing the tattoo that is so clearly visible in the photo of “Tia” on the “Desert Diva” Web site.

Simple, um, mistake, right?

After being arrested, Aguayo spent nearly two months in jail before she was granted a supervised release pending an upcoming trial.

While she was in the clink, Aguayo lost custody of her daughter, Jasmine, and has since been unable to get her back.

For a variety of reasons that have a lot more to do with subsidizing preferred business interests than energy or environmental policy, Congress has fallen in love with biofuel subsidies and mandates.  We’ve talked quite a bit on this site about ethanol.  Here is another example, via Mark Perry:

It sounded like a good idea: Provide a little government money to convert wood shavings and plant waste into renewable energy.

But as laudable as that goal sounds, it could end up causing more economic damage than good — driving up the price of raw timber, undermining an industry that has long used sawdust and wood shavings to make affordable cabinetry, and highlighting the many challenges involved in decreasing the nation’s dependence on oil by using organic materials to create biofuels.

In a matter of months, the Biomass Crop Assistance Program — a small provision tucked into the 2008 farm bill — has mushroomed into a half-a-billion dollar subsidy that is funneling taxpayer dollars to sawmills and lumber wholesalers, encouraging them to sell their waste to be converted into high-tech biofuels. In doing so, it is shutting off the supply of cheap timber byproducts to the nation’s composite wood manufacturers, who make panels for home entertainment centers and kitchen cabinets.

The federal government can provide up to $45 a ton in matching payments to businesses that collect, harvest, store and transport biomass waste to an authorized energy facility. That means sawdust or wood shavings may be twice as valuable if a lumber mill sells them to a biomass energy company instead of to a traditional buyer.

This is bad news for the composite panel industry, which turns these materials into particleboard and medium-density fiberboard, and outranks the U.S. biomass industry in terms of employees and economic impact, with 21,000 employees and annual sales of $7.9 billion, according to 2006 U.S. Census data.

The article poses this as a dueling jobs situation, but the result not only leaves us worse off economically, it leaves us worse off environmentally.   And the explanation is all Hayek and the limits on information possessed by a few individuals in Congress vs. 300 million market actors.  It is pretty clear to me that, to whatever extent Congress even thought at all about this legislation, they must have assumed that wood shavings were “waste.”  What happened, most likely, is some entrepreneur and his VC backers came to Congress saying that all this sawdust is just wasted and if you give us a fat subsidy, we can build a valuable business burning it for power.

But in fact, businesses (no matter how much environmentalists believe otherwise) abhor waste.    When a tenth of a percent on margins is important, a lot of people have financial incentives to either reduce the waste or do something productive with it.  Which is why there is a whole industry using sawdust and chips already to make various building products.  And I won’t go into the math, but trust me that this kind of use for waste is far more efficient, both economically and environmentally, for the waste than just burning it.

Via the Arizona Republic, from a deposition by Sheriff Joe Arpaio:

Arpaio says he was not well versed on the Fourth Amendment to the U.S. Constitution, or its counterpart in the Arizona Constitution, which prohibit unreasonable searches and seizures.

Yeah, no kidding.  This is just kind of bizarre.  I get the whole ghost-writer thing, but at least Obama actually seems to have read the book that was ghost-written for him:

Maricopa County Sheriff Joe Arpaio has not read the book he co-authored in 2008, which includes information on Arpaio’s philosophy on America’s immigration problem and how to cope with the nation’s porous borders.

Arpaio’s lack of familiarity with the book, “Joe’s Law – America’s Toughest Sheriff Takes on Illegal Immigration, Drugs and Everything Else That Threatens America,” was among the revelations to emerge from a nine-hour deposition the sheriff gave as part of a racial-profiling lawsuit filed against the Sheriff’s Office.

Update: There is a spin in the article that Sheriff Joe is just a delegator, like any good corporate executive.  I am generally considered to be far more comfortable with delegation than average, and even I know a lot more about my business than Sheriff Joe does about his.    Part of the reason is likely that I don’t spend 95% of my time on media and PR events to boost my name recognition at public expense.  And you can be dang sure that I know certain pieces of legislation that are important to my business, like the Fair Labor Standards Act and the Service Contract Act, better than my lawyers.

I missed this in the original discussion of the stimulus.  I was one of the first to point out that most of the stimulus was earmarked for maintenance of state government budgets rather than the infrastructure projects people thought they were getting  (here and here).  But I missed this part of the law, which basically made acceptance of these funds a suicide pact for many states:

Worst of all, at the behest of the public employee unions, Congress imposed “maintenance of effort” spending requirements on states. These federal laws prohibit state legislatures from cutting spending on 15 programs, from road building to welfare, if the state took even a dollar of stimulus cash for these purposes.

One provision prohibits states from cutting Medicaid benefits or eligibility below levels in effect on July 1, 2008. That date, not coincidentally, was the peak of the last economic cycle when states were awash in revenue. State spending soared at a nearly 8% annual rate from 2004-2008, far faster than inflation and population growth, and liberals want to keep funding at that level.

A study by the Evergreen Freedom Foundation in Seattle found that “because Washington state lawmakers accepted $820 million in education stimulus dollars, only 9 percent of the state’s $6.8 billion K-12 budget is eligible for reductions in fiscal year 2010 or 2011.” More than 85% of Washington state’s Medicaid budget is exempt from cuts and nearly 75% of college funding is off the table. It’s bad enough that Congress can’t balance its own budget, but now it is making it nearly impossible for states to balance theirs.

These spending requirements come when state revenues are on a downward spiral. State revenues declined by more than 10% in 2009, and tax collections are expected to be flat at best in 2010. In Indiana, nominal revenues in 2011 may be lower than in 2006. Arizona’s revenues are expected to be lower this year than they were in 2004. Some states don’t expect to regain their 2007 revenue peak until 2012.

So when states should be reducing outlays to match a new normal of lower revenue collections, federal stimulus rules mean many states will have little choice but to raise taxes to meet their constitutional balanced budget requirements. Thank you, Nancy Pelosi.

Apparently a couple of states (no surprise, Texas is among them) were smart enough to turn down some of the money.

From the Boston Herald via Radly Balko:

Grinchlike union bosses are blocking at least 200 of Boston’s best teachers from pocketing bonuses for their classroom heroics in a puzzling move that gets a failing grade from education experts.

The Boston Teachers Union staunchly opposes a performance bonus plan for top teachers – launched at the John D. O’Bryant School in 2008 and funded by the Bill and Melinda Gates and Exxon Mobil foundations – insisting the dough be divvied up among all of a school’s teachers, good and bad.

The civil courts of Maricopa County (which includes Phoenix) are being overwhelmed by photo-radar cases from state photo-radar trucks on state highways.

In the 2008 fiscal year, ending June 2008, the total annual filings in the justice courts amounted to 435,014, which included DUI, traffic, misdemeanor and civil cases, according to the county. Since November 2008, speed-camera cases have flooded the justice courts, averaging 42,326 cases a month, accounting for 50 percent of the filings. Administrators for the justice courts expect the total might reach 600,000 this fiscal year.

Of course the solution proposed is not to get rid of the photo radar but to raise fees to cover the administration.  But you could have guessed that without me telling your, couldn’t you?

Via the AZ Republic, the excepting of which will probably bring in all kinds of spam code into this post no matter how hard I try to get rid of it:

Arizona wildlife officials are investigating the shooting death of a prairie dog in southern Arizona.

Apparently the state is irritated because this prairie dog was brought to the state as part of a program to bring more plague-infested nuisance rodents onto our land – on purpose!

The prairie dog was one of more than 100 transported from New Mexico in October 2008 in hopes of reintroducing the indigenous species to southern Arizona.

Cameron Scott meant this sentence as a withering critique of everything that is wrong with the government, from his point of view:

Transit riders shouldered four times the share of the MTA [Metropolitan Transit Authority] 2008 budget disaster [than] drivers did, but officials promised to seek more revenue from parking.

Holy cr*p!  You mean that transit users shouldered four times more of the transit budget than transit non-users?  Gasp!

The Bay Area where he lives is experiencing light rail disease.  This is the phenomenon where middle class voters along heavy white collar commuting routes push for horrendously expensive light rail lines.  The capital costs of these systems drain transit budgets into the distant future, forcing service cuts, particularly in bus systems that serve the poor.  The result is that the city ends up with bigger transit bills, but less actual transit, and progressives like Scott scratch their head and try to figure out what went wrong.  It must be because non-users of Transit aren’t paying enough!

Cameron Scott argues this when he says:

It’s funny how green-haters accuse greens of being catastrophists, and then argue that cutting carbon emissions will destroy our economy and send us back to the Dark Ages. (See the trailer of Phelem McAleer‘s Not Evil Just Wrong for a prime example.)

Well, the last pooh-pooh is on them: It turns out we’re already cutting emissions in the United States. Sure, some of that is due to a sluggish economy. But negative economic circumstances don’t account for the 9 percent reduction in carbon emissions since 2007. In fact, the amount of carbon dioxide produced for every dollar of economic output declined by 3.8 percent in 2008.

I responded:

I really wish you would apply your analytical abilities to equities so I would have some way to bet against you.

Had you looked, you would see that the US has been reducing the CO2 intensity for a unit of economic output for decades. Here is the first source I found online but there are zillions.  In terms of improvement, the US has done better on this metric in the last 20 years than nearly any other country in the world, and just as well as the best (e.g. Germany)

So what you tell is not a new story, and has nothing to do with recent governmental dictats or pleas by environmentalists and everything to do with the ongoing incentives of individuals and businesses to reduce costs and be more efficient.

The reason our total Co2 output has not decreased is that while CO2 per unit of GDP (I will call this CO2 efficiency) has improved 2-4 percent per year, our GDP has grown the same rate or faster. So our overall CO2 output is flat to up (and has actually been down the last few years). One of the main reasons Europe has done better than the US in total CO2 reductions is not improvements in CO2 efficiency, but because their economies have lagged. They bent over backwards in Kyoto to make 1990 the baseline year, so they could include the horrible economies of Russia and East Germany which were in the process of crashing, thus giving them an automatic CO2 reduction for nothing.

Anyway, just look at your own numbers. In the year before, we got about 3% improvement in Co2 efficiency and had about 3% economic growth so CO2 output was flat to down. Last year we had about 3% improvement in Co2 efficiency and the economy was down a lot and thus CO2 was down a lot. When there are two variables in a function, and only one is changing, most logical people attribute the change in output of the function (ie changes in total CO2 output) to the variable that changed (ie economic growth). You, for some reason, attribute changes in the output to the variable (co2 efficiency improvements) which basically remained unchanged. Nice analysis.

You can even see it in your numbers. If CO2 efficiency is up 3.8 percent and Co2 output is down 9 percent, then that means the economic growth/size component has to be down 5.4% (.91/.962 – 1). So almost 60% of the “improvement” is due to a very bad recession and 10% unemployment, but you attribute it to the unchanging 40% piece.

Did anyone in the environmental movement study math or economics?

The graph is large, so you will have to click through to it, but basically it shows employment losses and wage changes by industry in the US from 2008 to 2009.  What confuses me is that all these industries show fairly large hourly wage gains, with gains the largest in certain sectors with the largest employment losses.

I come up with one of two explanations:

• Labor laws, union contracts, and other structural barriers in the economy make it difficult to cut wages in a recession, which in turn probably makes unemployment worse
• The average wage gains are due to mix shift – companies preferentially lay off newer and less skilled employees who make lower wages, shifting the average wage mix upwards.

Not sure which it is.  Probably a bit of both.

There always have been good, logical reasons to discuss the Community Reinvestment Act (CRA) as one contributor to the mortgage meltdown last year.  After all, the act is effectively a prod to banks to lend to people who would not normally meet their lending criteria, and to do so on terms (e.g. no money down) they might not usually offer.

The usual response from supporters is that the numbers are too small to matter.  I tended to agree with this — until I saw this graph, from Peter Schweizer via Carpe Diem.

Unfortunately he does not have a source or methodology, so I have to retain some skepticism, but if true these numbers are far from trivial.  He writes:

According to the National Community Reinvestment Coalition, in the first 20 years of the act, up to 1997, commitments totaled approximately $200 billion. But from 1997 to 2007, commitments exploded to more than $4.2 trillion. (Keep in mind this is more than four times the size of the current health bill being debated in Congress.) The burdens on individual banks can be enormous. Washington Mutual, for example, pledged $1 trillion in mortgages to those with credit histories that “fall outside typical credit, income or debt constraints,” and was awarded the 2003 CRA Community Impact Award for its Community Access program. Four years later it was taken over by the Office of Thrift Supervision.

This effort was backed by a parallel effort at Fannie Mae and Freddie Mac to buy up these loans:

Beginning in 1992, Congress pushed Fannie Mae and Freddie Mac to increase their purchases of mortgages going to low and moderate income borrowers. For 1996, the Department of Housing and Urban Development (HUD) gave Fannie and Freddie an explicit target — 42% of their mortgage financing had to go to borrowers with income below the median in their area. The target increased to 50% in 2000 and 52% in 2005.

For 1996, HUD required that 12% of all mortgage purchases by Fannie and Freddie be “special affordable” loans, typically to borrowers with income less than 60% of their area’s median income. That number was increased to 20% in 2000 and 22% in 2005. The 2008 goal was to be 28%. Between 2000 and 2005, Fannie and Freddie met those goals every year, funding hundreds of  billions of dollars worth of loans, many of them subprime and adjustable-rate loans, and made to borrowers who bought houses with less than 10% down.

Fannie and Freddie also purchased hundreds of billions of subprime securities for their own portfolios to make money and to help satisfy HUD affordable housing goals. Fannie and Freddie were important contributors to the demand for subprime
securities.

Obama has a personal history with this effort, actually suing banks who would not provide the sub-prime lending that he later, as President, blamed them for undertaking

Obama’s battle against banks has a long history. In 1994, freshly out of Harvard Law School, he joined two other attorneys in filing a lawsuit against Citibank, the giant mortgage lender. In Selma S. Buycks-Roberson v. Citibank, the plaintiffs claimed that although they had ostensibly been denied home loans “because of delinquent credit obligations and adverse credit,” the real culprit was institutional racism. The suit alleged that Citibank had violated the Equal Credit Opportunity Act, the Fair Housing Act and, for good measure, the 13th Constitutional Amendment, which abolished slavery. The bank denied the charge, but after four years of legal wrangling and mounting legal bills, elected to settle. According to court documents, the three plaintiffs received a total of $60,000. Their lawyers received $950,000.

Now, Congress and Obama want to strengthen the CRA — talk about not learning from mistakes.

Now comes Rep. Eddie Bernice Johnson, D-Texas, and 50 other co-sponsors (all Democrats) of H.R. 1479 the “Community Reinvestment Modernization Act of 2009,” who want to expand the CRA to include not just banks but also credit unions, insurance companies and mortgage lenders. Congressman Barney Frank, chairman of the House Financial Services Committee, has supported the idea in the past. The SEIU and ACORN, along with a host of other activist groups, are also behind the effort.

President Obama has been a staunch supporter of the CRA throughout his public life. And his recently announced financial reforms would make the law even more onerous and guarantee an explosion in irresponsible lending. Obama wants to take enforcement of the CRA away from the Federal Reserve, the FDIC and other financial regulators who at least try to weigh bank safety and soundness when enforcing the law, and turn it over to a newly created Consumer Financial Protection Agency (CFPA). This agency’s core concerns would not be safety and soundness but, in the words of the Obama administration, “promoting access to financial services,” which is really code for forcing banks to lend to those who would not ordinarily qualify. Compliance would no longer be done by bank examiners but by what the administration calls “a group of examiners specially trained and certified in community development” (otherwise called community activists). The administration says, in its literature about the reforms, that “rigorous application of the Community Reinvestment should be a core function of the CFPA.”

Looks like there may be jobs available after all for all those folks who got fired from ACORN.

Kevin Drum and the left think falling savings rates are all … wait for it you are going to be shocked with surprise … Reagan’s fault.  OK, you are not surprised, since in left-world everything that is not Bush’s fault is either Reagan’s, Wal-mart’s or Exxon’s.

Paul Krugman looks at this chart of the personal savings rate in the United States and concludes that Reaganomics is the most likely reason that it fell off a cliff….

But I’d point to two other things that Krugman mentions: financial deregulation and stagnant median wages.  Those seem like much more likely villains to me.  Starting in the late 70s, middle class wages flattened out, which meant there was only one way for most people to support the increasing prosperity they had long been accustomed to: borrowing.  At the same time, financial deregulation unleashed an industry that marketed itself ever more aggressively on all fronts: credit cards, debit cards, payday loans, day trading, funky home mortgage loans, and more.  It was a match made in hell: a culture that suddenly glorified debt; an easy money policy from the Fed that made it available; a predatory financial industry that promoted it; and middle-class workers who dived in to the deep end without ever quite knowing why they were doing it.So, yeah, Reagan did it.  Sort of.  But he had plenty of help.

This is a great variation of the classic “I know what caused bad trend X — everything I was against before I learned about bad trend X.”  The following was my response in the comments:

1. The chart on the left starts out at 8%. Drum picked a recession peak as his starting point, a clever trick, but it appears that when Bush 1 left office the number was still about 8%. The largest fall seems to be in the Clinton years. For which, by the way, I don’t “blame” Clinton any more than Reagan, certainly not without any real evidence or understanding of the mechanism involved.
2. Drum’s “consumers are all stupid pawns of electronics retailers and credit card companies” wears thin at some point.   It’s funny how everyone thinks this is true… of everyone else, but not himself.
3. Let me posit an alternative. The 1980s and 1990s saw huge percentage increases in asset values, both equities and homes. This began just about at the time the savings rate dipped. I would posit that consumers, in their mental calculation of savings, included paper gains on these assets. These paper gains are not, to my knowledge, included in savings rate numbers (you can be sure that is true because, if they were, savings rates would have dropped in late 2008). Thus consumers saved less money from their paycheck (which is measured, so it showed a drop in savings rate) while they considered themselves still to be saving as much or more as previously, because they were counting paper profits on assets as savings.  The big decreases coincide with the 80′s bull market, the 90′s bull market / internet bubble, and this decades housing bubble.

My explanation in number three will look even better if we see an increase in savings rate over the coming years as consumer expectations about asset value changes are made less exuberant by the recent burst bubble.  A fascinating chart would be to plot savings rate against some measure of consumer expectations of future asset price increases.  I bet they would correlate pretty well.

A quick note to many small businesses out there that use Quickbooks.  I know that most of us are cynical about annual upgrades from people like Microsoft as they seldom add any new functionality one actually needs, so they are seldom worth the price.  But there is an additional reason not to upgrade Quickbooks.  Every single version, since at least 2004 and up to and including 2009 has been worse than the previous year’s version.  Somewhere around 2006 we got data file bloat, where the size of the company data file mushroomed 10-fold.  Around 2008 we got a goofy and intrusive place-a-phonecall-to-India authorization process.  In 2009 most of the online banking features were broken.

It is kind of funny to read Quickbooks reviews on Amazon, with each successive generation getting fewer stars.  Every version is dominated by reviews that begin with “worst quickbooks version yet.”   Quickbooks 2009 right now is at about 2 stars, and is buoyed that high only by an aggressive campaign by Intuit employees to post 5-star reviews.  I stopped upgrading my business version around 2006 (and wish we had stopped earlier) but one of the non-profits I do the books for upgraded to 2009 and it is a mess.  Unfortunately, if you use the online banking functions or payroll service (we do not) Intuit forces your company to upgrade as there is apparently a 3-year clock built into the software that shuts down and forces an upgrade.

Its time for those market forces to get to work and make someone rich by bringing out an alternative.  Intuit is right for the plucking, if someone has the right product.

In the US last year, 754,224 people were arrested for possession (not dealing or production) of marijuana.  By the logic of US drug laws, all of these folks are better off with an arrest record and possible incarceration that they are from the nominal negative effects of smoking marijuana (FBI report here, via Radley Balko).  These numbers are just insane.  And while the report only gives race numbers for total drug arrests rather than for just marijuana offenses, a hugely disproportionate number are black (over 1/3 of arrests).

And speaking of equal protection, the arrest numbers for gambling are eye-opening (table 43).  75% of all people arrested for gambling last year in the US were black, including 90% of the arrests of those under 18 for this offense.  It seems it is A-OK for whites to play poker at home for money (I’m guilty) or to bet in Super Bowl pools (guilty again) or to clad themselves in polyester and head to the casino boat, but blacks who choose to compete with the state gambling/lottery monopoly will get arrested.  As an aside, I have always laughed at the government piously suing tobacco companies for targeting minorities with their advertising and then using the same techniques themselves to target minorities for their lottery sales.

Usually an article like this would blame the US:

Global carbon dioxide emissions in 2008 rose 1.94 percent year-on-year to 31.5 billion tonnes, German renewable energy industry institute IWR said on Monday, based on official information and its own research.

Several other leftish / alarmist sites picked up the story, but still didn’t hammer the US, saying only that the US is the largest contributor to total emissions but not whether it contributed significantly to last year’s rise.  It turns out there is a reason for this.  US emissions were actually way down, falling far faster than the drop in economic growth:  (from the EIA)

The story tries to put a positive spin on Europe  (again, the preferred story line is always Europe-good-America-bad):

Carbon dioxide emissions from heavy industry participating in the European Union’s Emissions Trading Scheme fell 3.1 percent last year compared with 2007, the EU’s executive Commission said in mid-May

This is a carefully worded cherry-picking on one sector of the economy.  I would be willing to bet almost any amount of money that the rest of Europe’s economy saw less of a drop or even an increase.  Even so, the cherry-picked sector, the one subject to cap-and-trade, still underperformed the US.  Overall, US emissions have fallen since 2000 without any real regulatory program and just the normal incentives of economic efficiency at work.

The US is NOT the problem when it comes to future emissions growth.

Nancy Pelosi said this the other day (emphasis added)

I’m very pleased that our Chair of our Democratic Congressional Campaign Committee and member of the leadership will be talking too about the immoral profits being made by the insurance industry and how those profits have increased in the Bush years. We all believe in the profit motive; we all want to reward success.  But having that success come at the expense of America’s working families — have that success come by withholding care, when a person becomes ill, is just not right and we’re going to take this issue in a new direction.

In the past, other leftish pundits have been even more direct:

It means the health insurance industry is scared that we might actually do something in 2009 and they want to be seen as something other than completely obstructionist. That means only one thing: they’ve shown fear, and now it’s time to bore in for the kill and gut them like trouts. Let’s get to it.

I don’t have time to redo the analysis, but for the third quarter 2008 (the last quarter of the dreaded Bush years that increased insurance profits so much) I looked up on Google Finance the profit margins of major health care insurers, providers, and HMO’s.  I am not sure who the Democrats would consider the real Satan of health insurance (ala ExxonMobil or Wal-Mart) but if I left a key company off you are welcome to suggest it in the comments.  Anyway, 3Q08 profit margins were:

Cigna: 3.50%

United Health Group: 4.56%

Aetna: 3.64%

WellCare:  4.08%

Amerigroup: 3.51%

Humana 2.56%

WellPoint: 5.49%

So, if you are a business owner (and that includes those of you who own equities, which are ownership shares), be very afraid.  Look at your company or your favorite stockholding.  If they have margins of 2.5% or more of revenues (and that includes just about every profitable company in America — I think the industrial average is in the eights) then Nancy Pelosi and the Democrats consider your profits immorally high and they intend to gut you like a trout.

Update: OK, I had a bit of time to update numbers, so I took Cigna, which is the first on the list, and looked at their net profit margin over 4 years:

2005:  7.6%

2006:  7.0%

2007:  6.4%

2008:   1.5%

Hmm, not sure I see the profits increasing in the Bush years — looks like they are going down to me.  I would also observe that they never in the last four years even rise to average for a large American public company.

The scare story, from November 2008:

Advocates for the nation’s automakers are warning that the collapse of the Big Three – or even just General Motors – could set off a catastrophic chain reaction in the economy, eliminating up to 3 million jobs and depriving governments of more than $150 billion in tax revenue.

Industry supporters are offering such grim predictions as Congress weighs whether to bail out the nation’s largest automakers, which are struggling to survive the steepest economic slide in decades.

Even if just GM collapsed, the failure could bring down the other two companies – and even the U.S. operations of foreign automakers – as parts suppliers run out of money and shut down….

Automakers say bankruptcy protection is not an option because people would be reluctant to make long-term car and truck purchases from companies that might not last the life of their vehicles.

I called BS on this at the time.  Turns out it was yet another made-up scare story to justify government coercion and more unthinking expenditure of taxpayer dollars:

One of the biggest fears of a GM bankruptcy filing — a collapse of revenue — appears to not be as prominent an issue as originally thought.

Car buyers appear undaunted by GM’s bankruptcy, assuaging one of the auto maker’s biggest fears heading into Chapter 11. Early signs point to stable demand for GM cars and trucks since the company filed for Chapter 11.

Mr. Henderson said June retail sales are tracking higher than May. “June sales are moving along just fine,” Mr. Henderson told reporters at a summit in Detroit. Sales to rental and other fleets are down from last month, he said. “We’re very gratified for the support of dealers and customers that we’ve received through this.”