CNBC Welfare

CNBC is on its big-government kick again, the first real drive for the socialization of risk and the privatization of profits since the Bush-Pelosi Bailout. The subjects in the last half hour ranged from bailing out those who have mad mortgages, bailing out banks who gave bad mortgages, and also bailing out GM because they are too big to fail.

As Tom says in his latest post, controlling the knee-jerk left will be Obama’s biggest challenge, if Obama is elected President. Mortgage bail-outs can be one example. There are a lot of ways to increase affordable housing (such as subsidizing urban light rail and mass transit, which would allow more people to have apartments in the city and commute to work, without having an expensive car), and help the auto industry (such as heavily subsidizing alternative-fuel vehicles).

The other approach is to just write checks, which CNBC and many in the Democratic Party support.

If Obama wins, I hope he’s up for the challenge.

After the Gap’s attack on the Seam

After Russia invaded Georgia, some criticized me for focusing too much on ways to minimize Rusisa’s power. These critics came in two broad camps. One thought that Russia was the superior force in Europe, that the West was basically helpless, and that the wise way forward was to accept a reconstitution of Russia’s near abroad and otherwise get on with life. Another camp argued that Russia, even is weak, was the natural partner for the U.S. in this situation, that Russia and the United States would rise and fall together, and that opposing Russia’s invasion amouned to a civil war within the West.

Now, a season later, it’s clear that Russia was oil-mad, that Russia is in a state of deep decline, and that dropping oil prices are the quickest way to get Russia to sober up and minimize their meddling in the Core.

Here are some links from the blogosphere which do a good job of describing Russia’s weakened state, and how low oil prices will help:


The days of credit given to those who cannot handle it sure shook the world. Economies in recession led to markets slowing down. The big under reported story of this downturn is the falls effect on oil prices. As of late October oil prices were trading below $65 a barrel. For the last several years dictatorial countries like Russia, Venezuela, and Iran managed to expand their operations with gas profits. Will these powers slim down their operations or will they fall like the Soviet Union under pressure from their growing monetary demands.

From Tom:

The one place I really worry about is China. I don’t think their current leadership is up for much (remember, it’s 4th Generation homebodies) other than pulling in their heads and hiding in their shell. Maybe a bit more from India, and hopefully more from Brazil. Another upside is that the air is deflating in Moscow’s big head, so enough of that nonsense.

And courtesy Mark and Lex:

How likely is it that Russia will face serious economic problems? Although high oil prices are ensuring a steady flow of money into the state treasury, there have been signs of economic vulnerability. The cost of living is rising sharply, with inflation reaching 12.6 percent in January 2008. Owing partly to lax lending standards, consumer and corporate credit is increasing rapidly—by 50 percent a year. A surge in external borrowing by Russian banks to fund credit expansion has aroused concerns about a crisis of liquidity in the banking system if access to foreign borrowing is curtailed. Moreover, according to Anatoly Chubais, Russia’s current account surplus is declining to the point where it could disappear in just a couple of years. There has been a marked slowdown in the growth of Russia’s oil output, resulting from the failure to invest in oil extracting capacity. Income from oil and gas may not be sufficient to cover future imports.

After Russia invaded Georgia, there was a not of hyperventilation in the blogosphere. Now it is possible to see it in context, as a Gap state invading a Seam neighbor. Imagine Venezuela shelling a province or Colombia, or Iran annexing part of Azerbaijan, and the basic story wouldbe the same.