Mail 732 Wednesday, July 11, 2012
On the San Bernardino County notion of using eminent domain to take over underwater mortgages at fair market value and renegotiate with householders to let them restructure the loan. Banks would have to sell at current value; owner/occupiers would start with zero equity but begin to acquire equity as they paid down the mortgage. This is under discussion in San Bernardino. We have a great deal of mail on this. Here is a selection.
Eminent Domain to solve the housing crisis
It seems to me that this is probably what most people had in mind when they heard all the various government figures talking about "a solution to the economic crisis". Instead we got a half billion dollars to guarantee that banks could still pay bonuses, and another half billion to prop up pension funds for a couple years.=
Thoughts on banks, counties, underwater mortgages…
I have a vague notion that one or more of the federal bailout schemes allows banks to carry on their books underwater mortgages as though they are not… If such is the case, having those mortgages seized by the county – even though the county pays current fair market value – will force the banks to recognize for accounting purposes losses which all have been pretending never happened. This could reduce a bank’s capital to the point it would be forced into bankruptcy or a takeover. Then the limits of FDIC insurance, if enforced, would pass the losses to depositors…possibly even that very county and it’s various pension/retirement plans.
And given the way mortgages were securitized and then sliced and diced, with state and local deed and mortgage recording requirements sometimes evaded to save recording fees and taxes, it might not be possible to seize a mortgage related to a specific property. In some instances banks have been unable to foreclose delinquent properties because they could not prove ownership of the mortgage.
And no one, to my knowledge, has been criminally charged over this. In fact, some who probably should have been charged and convicted have been bonused instead.
San Bernardino Theft
The fair market value of those homes that are being talked about in San Bernadino has never been established, because so much of the distressed property has not gone under the auction gavel. A great amount of it is owned by the federal government through loan guarantees put forward by Fanny Mae and Freddy Mac – and the Obama plan is to sell them in bulk to investment firms to rent out – again, not letting the market set the value.
In fact, this plan harms all home owners as well as home buyers – not only is the bottom of the market never created, but the natural upswing that would benefit those who are treading water at the moment will never come – A floor isn’t established, but the top of the market sure is, and homes that wouldn’t be ‘underwater’ become that way as neighbor’s house after neighbor’s house is seized, with the county becoming effectively a landlord.
More problematic is where does San Bernardino come up with the money for this plan? They’re already scraping the bottom to just cover the interest they owe to CALPERs for the losses from the dot.com bust – they’ve yet to pay back a penny of the actual losses to CALPERs, and just barely pay the interest on what those losses would have brought.
The most frightening words anyone can ever hear are: I’m from the government, and I’m here to help.
I think the San Bernardino proposal is a worthwhile experiment; this is precisely the kind of innovative thinking we need at the *local* level.
Like you, I instinctively a) saw a lot I liked about the San Bernadino proposal and b) felt that it was worth trying *as long as it was handled at the local level, not by the Federal government*.
Were the Federal government to propose such a scheme, I would be unalterably opposed to it. But if San Bernardino does something I don’t like, I can always move to San Diego, or Los Angeles, or Parsippany.
Because liberals believe in human perfectibility, they don’t understand the importance of the ability to escape governmental experiments gone wrong, and how Federalism provides such an escape hatch. Conservatives always look for an exit strategy.
Actually it’s more complicated than at first blush. Still not a good idea.
Eminent Domain and the housing bubble
Bad idea for counties to try to "help" the underwater homeowner. Just as the federal government originally created the housing bubble by bankrolling a scheme in which everyone could be a homeowner, the county government will bankroll this latest scheme the same way – by plundering the taxpayers.
Morally this only makes sense if one can assume that housing is a right of some kind, and that rights are granted by the government.
The county government can really help the homeowners in only one way – by easing the property tax burden. Homeowners who bought in at highly inflated prices pay huge property taxes as Prop. 13 does not help them. But this would require a shrinkage of the county bureaucracy; a zero probability as Pournelle’s Iron Law shows us.
I probably got more mail on this than any other subject this year. I have given some of the range of that mail above. My own view is that a county is very likely to be the proper level for such experiments. I am not sure what I would decide were it my decision to make. I do know that until the uncertainties are cleared out of this, the real estate situation will remain very bad. I do agree that there are complexities we probably have not thought out.
It is generally considered a good thing for a republic to have a large middle class: those who possess the goods of fortune in moderation. Housing ownership is economically an interference with the mobility of labor, but a very conservative influence on behavior and is usually considered a good thing. All that can be debated. No one is thinking entitlement here: the question is one of what to do about a particular disaster that has happened due in part to government activity – pressure on lending organizations to make loans to those who should not have been borrowing – and government injection of money into the market was a major cause of the bubble in housing. That bubble has burst and until its effects are cleared away there will be mounting problems, particularly as houses are abandoned and slowly destroyed. A giant potlatch is probably not a good idea.
XCOR Leaves California for Texas –
Are any of us surprised?
A commercial aerospace firm based in eastern Kern County announced Monday that it is expanding its operations to Texas, a move characterized by some observers as an avoidable economic loss to Kern County and the state as a whole.
XCOR Aerospace, a manufacturer of reusable rocket engines and the developer of the Lynx, a suborbital space plane designed to carry two persons or scientific experiments to the edge of space, announced the move Monday at a press conference in Midland, Texas, the site of its new research and development center.
Indeed, Greason has described the growing space port in eastern Kern as "the Silicon Valley of the private space industry" and the premier location for civilian flight research and testing in the United States.
But California’s less favorable tax and regulatory environment — and its inability to pass timely liability protection for companies planning to invest in commercial space tourism — made it easier to make the move, he said.
"We did look at three or four other sites," he said. "Each had different strengths. But the folks in Midland were very persuasive."
Gov. Perry was on hand Monday to welcome XCOR.
And where is Jerry Brown? Pitching pie-in-the-sky trains and tax initiatives.
Astonishing. Who would have seen that coming? Mojave once had a future as a spaceport but I do not think it will for long. Oklahoma and Texas want such companies.
On Roberts: A Dialogue
Your analysis is the best I’ve seen to explain why Roberts did what he did, and I agree that this election is critically important.
I just wish we were running Reagan and not Romney. We sorely need a statesman with grand vision (not just the guy who’s turn it is) right now.
I doubt you could find many among my readers who do not wish we were running Reagan rather than Romney. But wishing you had a full house when what you’ve got is three kings is not the best poker strategy. One plays the hand one is dealt. I have been here before.
I was a County Chairman for Goldwater…
I’m not sure that Romney is as good a hand as three kings, but if there were ever a year he could win this is it. I’m in the ground game here in Colorado too – precinct vice-chair. There’s a lot of despair here because the CO GOP is controlled by hard-right social conservatives who believe that we’re in a bright red state (it’s actually very purple). They pulled some shenanigans with civil unions at the end of the session that has the (rich) homosexual lobby riled up. It was like throwing fresh meat to rabid dogs (or a vulnerable republican to the liberal media).
As my dad always says, the Republicans never fail to miss an opportunity to miss an opportunity.
In the end though, my real question is this. Can we actually roll back socialism? It now appears that even Reagan only put it on pause for 8 years, and then it continued its march towards serfdom. The only thing that comes to mind as a true rollback was, ironically, Clinton’s welfare reform, which now has been totally reversed by Bush II and Obama.
The real issue is how to change the culture. That takes a very very long time, and involves both a selfless (I’m going to take care
of myself) and selfish (I want to keep what’s mine) attitude that is sadly lacking among a growing majority of Americans. It’s
hard to get people to stop voting themselves someone else’s money, you know?
Changing the culture requires changing the schools which requires modifying towards abolition of credentialism. The more bureaucratic crap you put in the way of becoming a teacher the more bureaucrats you get as teachers. When they are then told to promote equality over merit they will do it. The result is what you are seeing.
Read Ortega for more.
But I think this is a year of big setback for the left. It will give us a chance to reassess and rebuild.
Eternal vigilance and all that, you know
Be of good cheer
Thanks Jerry – and you’re exactly right. I hadn’t put together why the left so adamantly opposes vouchers (when the primary beneficiaries are lower income folks). That’s the last piece in the puzzle.
We’ll do what we can for the ground game out here. If California ever gets too much for your family, Colorado is still a nice place to live!
Regarding your brief note on the Higgs. I’ve been frying other fish this weekend (as usual) but looked up the press releases when they come out. (I will be presenting at least some analysis in my presentation at LibertyCon…)
What they have said is a very conservative:
1. Each detector has an apparent particle with a five standard deviation excess of events over background, summed over the decay modes that the detectors can observe (2-photon and two-charged-lepton-pair decays, the former with high statistics and high background, the latter with low statistics but low background).
2. In that set of detectable decay modes, with significantly reduced statistics because of the systematic effects contributing to detection of the individual decay modes, the ratio of events is consistent with a Standard Model Higgs.
Just to confirm whether this is a Standard-Model Higgs, a NON-Standard Model Higgs, or something else will require from 10 to 20 dB more data, in my estimation. That includes picking up additional decay modes (one of the detectors sees a modest excess of events in a third decay mode).
As for me, I am certainly interested but I remain …well, prejudiced, is probably the best term — that the conventional Higgs does not exist as such. In part because I believe that energy and mass are intimately coupled, and the presence of mass does not require an ad-hoc additional field to provide it given that we know the system has energy present in other quantum fields. See the Feynman Lectures for more information (at http://www.feynmanlectures.info/FLP_Original_Course_Notes/, Physics 2, Summary S-28).
"Doc" Jim Woosley
This whole matter is far beyond my level of competence in physics, of course. I have always been a generalist meaning I know less and less about more and more until eventually at the limit I know nothing at all about everything. Still, I remain skeptical of modern physics, which seems to postulate that some great portion of the Universe is composed of stuff we can’t see and can’t detect but we infer from theories so complex that few understand them. Then we find that we live in a nearly unique corner of that universe that doesn’t have so much of the dark stuff.
I have the horrid suspicion that much of this comes from accepting a relativity principle that isn’t true; that is, there is something like an aether in which light waves, and it has something to do with gravitational fields, which do in fact pervade the universe – and light travels at different velocities in those gravitational fields because the aether has different densities depending on how far away they are from big gravitational field sources.. But that’s my cocktail party theory and I certainly won’t try to argue it. I was recently exposed to two PhD particle physicists, both of whom were convinced of relativity but knew less about it in general terms than I do, because it doesn’t impact on what they work on. Me, I am still trying to figure out why my watch slows down if you move toward me, and yes, I am being frivolous. On the other hand I don’t know if clocks in Denver keep different time when a burst of mesons heads toward the city at near light speeds. Of course if Denver isn’t moving and those mesons are it’s easier to comprehend why Denver doesn’t change so much. But that’s relativity for you.
And a remarkable achievement:
Shadow of an Atom!
Another great feat of legerdemain! A team led by Dave Kielpinski at Griffith University in Australia images an atom’s shadow
Regards, Charles Adams, Bellevue, NE
: One small step for SSTO
Masten Xaero climbs 444 meters and lands. <http://masten-space.com/2012/07/03/xaero-444-for-the-4th/>
(The sound is piercing. I muted my speakers when the Xaero returned to land. YMMV.)
Live long and prosper
h lynn keith
Dear Dr. Pournelle,
You asked about the phenomenon of ghost cities. I believe these articles do a good job of explaining the phenomenon.
Three paragraphs sum it up, I think:
"Back in 2009, filmmakers Sam Green and Carrie Lozano made a beautiful short film about the New South China Mall called “Utopia: Part 3 <http://www.pbs.org/pov/utopia/> .” It tells the story behind the mall’s construction: a local businessman who had gotten fabulously rich in the new Chinese market economy wanted to make his mark in the world by building something fantastic. No matter that the site, which was farmland, had no good access – by road or rail or any other conveyance.
Once the mall got built, it was “too big to fail,” and has been propped up by government-backed investors, a chilling example of useless infrastructure and wasted resources.
And yet around the globe, governments and business interests continue to build projects like these (see this report <http://www.urbanindy.com/2011/03/30/pre-conflict-an-american-in-libya/> from pre-conflict Libya, for instance). They should look more closely at the Chinese example — beyond the GDP numbers to the bricks-and-mortar reality. Because when economic growth is pursued for its own sake, without regard to the needs and capabilities of the humans inside that economy, it is only a matter of time before the bubble will burst"
So there you have it. Not that we should take any lessons from this with respect to ‘stimulus’ projects. Didn’t I hear Paul Krugman or Friedman say how much he admired China? Why, why, why do people who admire such catastrophes never actually want to *move* there?
* * *
Chinese Ghost Cities
They are failed real-estate ventures. In China, a person with a lot of guanxi (pull, influence, something like that) can get a bank loan, hire thugs to expropriate farmers (sometimes paying them nominal amounts so it looks legal), then build real-estate that, from the air, appears to be complete. Often they are unfinished shells. It is customary when buying chinese real-estate to have to install major appliances (like heaters), refinish interior walls, etc. If anything fails during this process: i.e. the developer becomes over-extended, a farmer happens to have -more- guanxi, the bank calls in a loan (banks are arms of the government, remember, so often a "frienclly" loan has no repayment schedule), or a government official needs an "example." Then the development fails, and becomes a ghost.
Ray Van De Walker
Actually I put a link and comments on this in View, but for the record
Climate was HOTTER in Roman, medieval times than now,
Climate was HOTTER in Roman, medieval times than now, according to a new study:
“A new study measuring temperatures over the past two millennia has concluded that in fact the temperatures seen in the last decade are far from being the hottest in history. A large team of scientists making a comprehensive study of data from tree rings say that in fact global temperatures have been on a falling trend for the past 2,000 years and they have often been noticeably higher than they are today – despite the absence of any significant amounts of human-released carbon dioxide in the atmosphere back then.
"We found that previous estimates of historical temperatures during the Roman era and the Middle Ages were too low," says Professor-Doktor Jan Esper of the Johannes Gutenberg-Universität Mainz, one of the scientists leading the study. "Such findings are also significant with regard to climate policy." They certainly are, as it is a central plank of climate policy worldwide that the current temperatures are the highest ever seen for many millennia, and that this results from rising levels of atmospheric CO2 emitted by human activities such as industry, transport etc. If it is the case that actually the climate has often been warmer without any significant CO2 emissions having taken place – suggesting that CO2 emissions simply aren’t that important – the case for huge efforts to cut those emissions largely disappears.”
And more, of course.
We have known all this since 7th grade, but apparently many continue to forget such things. What is important about CO2 is that those with the right lobbyists get rich, and the regulatory environment keeps upstart startup companies from competing with big important corporations. Capitalists will always conspire with government to restrict entry into their fields of endeavor. Always.
This was part of a set of charts sent. Note that the last days of the Roman Republic brought in subsidized and finally free grain. Weep.
How the surge was squandered
Dear Dr. Pournelle,
It’s pretty rare that ABC News and the Washington Post take President Obama to task, so I think it wise to point it out when they do.
There’s a new book which demonstrates why the Afghan surge was a failure while the Iraqi surge was a success. To be blunt, if you send 40,000 troops to the middle of nowhere, as opposed to the location where there’s actually an insurgency, you achieve nothing. Bedford Forrest’s dictum to "hit ‘em where they ain’t" isn’t applied this way.
I’m reading through the referenced book on Kindle now, so I haven’t got to the point mentioned in the interview where infighting in both the administration and the Pentagon paralyzed the effort and put it at permanent cross purposes. We were so busy fighting each other we forgot about the actual enemy in the field.
For the Pentagon, I’ll wager the solution is to simply give all those responsible a rifle and put them in Kandahar until they have a better sense of priorities. Dealing with the administration is less simple, but I suspect the phrase "ballot box" figures prominently.
The book is worth it for the first few chapters alone, which discuss American adventures in modernizing Afghan agriculture in the 1950s and 1960s, and how a great deal of money and effort was spent to achieve nothing. The Afghan farmers weren’t interested in changing, you see.
We won in Afghanistan within 90 days of going in. Then we decided to stay to remake the place. Alexander the Great caught on much quicker, as have all the rest who have ‘conquered’ Afghanistan over the centuries.
Dear Dr. Pournelle,
If I may crave your indulgence but a bit longer. I’ve already linked to the book under discussion earlier
but I’m reading through this book on Kindle and I believe it merits further comment. It is *extremely* enlightening albeit depressing, especially when discussing reconstruction of Afghanistan. A better title might be "Good Intentions".
Some case examples:
1) Opium is Afghanistan’s principal crop and a major source of Taliban income. So we gave away wheat seeds to Opium farmers so they would grow wheat instead.
Know what happened? The farmers took the free seeds, then turned around and sold them, using the money to buy fertilizer for their opium fields. You have any idea how much more opium sells for than wheat? You think they’re going to put that low-profit junk in their fields? Not hardly.
2) Tried to open a cotton farm, because cotton DOES offer a better profit margin than opium and is legal besides. The US government stepped on it. Why? Because that would mean competition with American domestic cotton. That’s a no-no! So the cotton effort was stillborn.
3) Tried to grow saffron, which is also a high-profit crop. It couldn’t be exported. Why? Because the fecal content in the saffron was a thousand times higher than in Saffron from Iran next door. I leave it to your imagination to guess why that would be so, but the word "hygiene" should figure prominently.
4) Tried, at the last, to burn down opium fields. Well, it turns out that opium is only A source of Taliban money. It is not THE source of Taliban money. They also get a heap of money from our "allies" in the Gulf and Pakistan. We didn’t hurt them much, but we did utterly beggar the small farmers who had put their livelihoods into those fields and lost it all. They joined up with the Taliban, who offered them wages with which to recoup their losses and feed their families. And they had no reason to love the US or the Afghan government anyway, given we’d just taken from them everything they had.
*Sigh*. Just remember, we’re from the government and we’re here to help.
It has never been clear to me what we want from Afghanistan. They make nothing we want to buy, and what they grow we are forbidden to buy; and they are far from us and expensive to occupy. Competent empire looks for more lucrative targets of conquest.
I am not sure why we want the Mayor of Kabul to be the Master of Afghanistan. I never have been. Iraq had oil. Not that we got any of it, but it was at least there.
Subject: Historic bridges of Yosemite Valley under siege
These guys are not going to be happy unless they tear down anything man made, I guess
Babies With Pet Dogs Or Cats Have Fewer Respiratory Tract Infections –
Providing additional support to the Pournelle ‘ It takes a dog to raise a village” theory.
Babies who are in close contact with dogs or cats during their first twelve months of life were found to enjoy better health and were less likely to suffer from respiratory infections, compared to those without any pets in the house or no close contact with these animals, researchers from the Kuopio University Hospital, Kuopio, Finland, reported in the journal Pediatrics…………The protective effect on infants from having a pet cat was also detected, but it was not as strong as with dogs. (LOL, edit.)…… http://www.medicalnewstoday.com/articles/247591.php
John from Waterford
Subj: Drones and GPS Spoofing
>>[R]esearchers led by Professor Todd Humphreys of the University of Texas at Austin Radionavigation Laboratory successfully demonstrated that a drone with an unencrypted GPS system could be taken over by a person wielding a $1,000 GPS spoofing device (pdf). Recently, … [Bob Charette, the editor of IEEE Spectrum magazine’s Risk Factor blog, spoke] with Professor Humphreys about GPS spoofing and its implications not only on UAVs, but other systems like financial systems (pdf) that use GPS for tasks such as data time stamping.<<
"Dimmocrats and mainstream Republicans differ only slightly on the subject of Big Government. Both are willing to cut your throat, but the dimmocrats want it to be done by public employees and the country club Republican set want it to be done by private contractors." <http://mostlycajun.com/wordpress/?p=18297>
Live long and prosper
h lynn keith
Despair is a sin. And the country club Republicans can sometimes be tamed.
Subj: Forbes: Five lessons for business startups — from Buffy the Vampire Slayer
Now that is downright amusing. Thanks.
Subject: How do you say "libertad económica" in English?
Some good comparisons of differences in the economy between Europe and the U.S.
airforce spying on Americans:
Holloman sits on almost 60,000 acres of desert badlands, near jagged hills that are frosted with snow for several months of the year — a perfect training ground for pilots who will fly Predators and Reapers over the similarly hostile terrain of Afghanistan. When I visited the base earlier this year with a small group of reporters, we were taken into a command post where a large flat-screen television was broadcasting a video feed from a drone flying overhead. It took a few seconds to figure out exactly what we were looking at. A white S.U.V. traveling along a highway adjacent to the base came into the cross hairs in the center of the screen and was tracked as it headed south along the desert road. When the S.U.V. drove out of the picture, the drone began following another car.
“Wait, you guys practice tracking enemies by using civilian cars?” a reporter asked. One Air Force officer responded that this was only a training mission, and then the group was quickly hustled out of the room.
Joshua Jordan, KSC
I remarked that I was hardly surprised.
Of course not; that doesn’t mean that we should not act astonished for public consumption and then display outrage.
Joshua Jordan, KSC
Ransom: Just Say No!
And despite Obama’s claims, nothing in Dodd-Frank actually makes illegal any of the unethical or damaging behavior, taken either in Washington or Wall Street, which created the financial mess caused by the easy availability of credit for real estate purchases. Nor does Dodd-Frank make our banking system safer as Democrats claim.
Actually quite the contrary.
As the bankruptcy under Democrat uber-genius Jon Corzine at MF Global shows, despite repeated attempts at reform through Dodd-Frank and Sarbannes-Oxley, thieves will always do what thieves will do
And while the left likes to blame Wall Street for the problems and the right likes to blame Washington, both sides were not only culpable, but in cahoots.
They still are.
If we are going to make real progress on actual reform, we have to break up the federal regulatory cabal, not codify it through ineffectual and dangerous legislation that makes no attempt to actually reform anything, but rather just gives stealing the soft name of lobbying.
In fact, Dodd-Frank will make our national banking system even more dangerous and much more likely to fail in the future no matter how much bragging Obama does about it.
And the next time we have a systemic crisis in banking in the US is the last time we will have a systemic crisis in banking.
The stakes are that grave. <Snip>
The stakes are indeed high. Repeal of Dodd-Frank and Sarbanes-Oxley is nearly as important as repeal of ObamaCare. The Republican leadership needs to be reminded of this, early and often. I know that Newt was aware of the importance of these measures. I am not privy to the beliefs of the others.
George Leopold ee times
6/6/2012 5:42 PM EDT
WASHINGTON — As if another example were needed, here’s the latest illustration of why Washington is dysfunctional.
There was great rejoicing last week over the highly successful commercial space mission to the International Space Station <http://www.eetimes.com/electronics-news/4374186/Slideshow–Pinpoint-splashdown-ends-first-visit-to-space-station> . The successful docking of a cargo ship designed and launched by Space Exploration Technologies, or SpaceX, was a great advance in terms of maintaining U.S. access to low-Earth orbit. It was a bit of good news amid the steady stream of bad economic news and man’s inhumanity toward his fellow man and women.
Now, a pissing match has erupted over who should get the political credit for the success of the SpaceX mission.
The commercial cargo and crew program under which SpaceX and other competitors operate was created, according to the chairman of the House Science Committee’s space panel, by the Bush administration in 2005. Congress authorized funding for the program, and SpaceX received its contract the following year.
Good for the Bush administration, which did not fund a successor to the space shuttle, and the Congress. Point for them.
At a hearing on Wednesday (June 6), space panel chairman Steven Palazzo, attacked the Obama administration for taking credit last week for the success of the SpaceX mission. Palazzo charged that John Holden, the White House science advisor, made “misleading” statements in claiming credit for the successful test flight.
We’ve got some news for the petty politicians: The credit for the success of the SpaceX first test flight goes to the engineers, designers, technicians, code jockeys, metal benders and managers at SpaceX along with NASA program administrators. If not for the months of testing and retesting, weeks of painstaking validation of the software code needed for spacecraft navigation and communications with the space station, this test flight would not have achieved all of its goals.
SpaceX and its visionary founder Elon Musk did what they set out to do. The politicians who control NASA’s budget and profess support for commercial space should drop the partisan crap and provide the funding necessary to build on the success of the first commercial flight to the space station.
© 2012, jerrypournelle. All rights reserved.