Until recently, it was always argued that the Chinese central bank would never abuse its position vis a vis the US because a US fiscal crisis would become a US economic crisis and that would hurt China through its export dependency. Mutual Assured Economic Destruction.

It turns out that China has, to a larger extent than previously appreciated, decoupled from the US. It’s not so export-dependent. A crisis can be pretty nasty in the US while China chugs along. So, MAED is not true. China could probably punish the US much more than it hurts itself.

I guess that people in Washington and Beijing have already started taking this into account in China-US relationships, but I haven’t seen it mentioned in public too often.

Greg Mankiw writes an open letter to the POTUS-elect telling him, amongst other things, to listen to his economists.

Mankiw’s advice a couple of months back was vote the economics advisor, not the candidate. In this aspect, Obama won easily. Yet, one always had the feeling that his economics advisors weren’t aware that Obama doesn’t have Reagan’s views of economics.

One of the interesting things in the first months of the presidency will be the tension between Obama’s plans and his economics advisors ideas. As Mankiw points out, McCain’s health-care plan (one of McCain’s better ideas but bad politics—a clear case of a candidate advocating good policy over good politics) was actually advocated first by Obama’s own Jason Furman (who also called Wal-mart a great progressive success story).

Under a Democratic congress eager for change power, I fear that the Chicago economists will be rapidly put to the side.

At then end of the debate, he had dropped to 53.5% (costing me a beer—I had my own bet going on). He is now at 57.2%.

Therefore, the markets recon that he did better on the post-debate than in the actual debate.

Here’s a funny video. It’s a taxi driver that, by mistake, took the place of an expert in a BBC interview:

This came to mind after hearing Gov Palin’s interview.

She always reminds me of a bad movie, in which a small town mayor finds himself suddenly on the national stage. Of course, in the movies, it turns out that the small town mayor, with his folksy wisdom is better than the experts. In real life, we have Sarah.

In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.

The action, which will begin as a pilot program involving 24 banks in 15 markets — including the New York metropolitan region — will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.

Fannie Mae, the nation’s biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.

[...]

”Fannie Mae has expanded home ownership for millions of families in the 1990’s by reducing down payment requirements,” said Franklin D. Raines, Fannie Mae’s chairman and chief executive officer. ”Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.”

Demographic information on these borrowers is sketchy. But at least one study indicates that 18 percent of the loans in the subprime market went to black borrowers, compared to 5 per cent of loans in the conventional loan market.

(via Coyote)

Now, you tell me, how would it be politically feasible to pass legislation making it harder to lend money to the poor?

A 2004 study by Frank Sloan and Jan Ostermann at Duke University found that heavy drinkers contribute slightly more to Social Security, through their higher average lifetime earnings, than nondrinkers do. What’s more, since alcohol abusers tend to die sooner than moderate or nondrinkers, they draw less money, over time, from the Social Security trust fund.

Their conclusion: the elimination of heavy drinking (three or more drinks a day) from each successive group of American 25-year-olds would cost the Social Security trust fund $3 billion over the cohort’s lifetime.

(in freakonomics blog via free exchange)

Should we have heavy drinking campaigns? Binge drinking is patriotic (maybe binge drinking better than paying taxes).

It’s not uncommon for health improvements to have bad impacts on social security. Smoking also seems to be good for the health of the state. Dying young is patriotic.

The day after the California Court decision to legalise Gay Marriage, I heard what sounded like an older woman on NPR saying something to the effect of Marriage should be between a man and a woman. It’s the Law of the land!

A remarkably large number of people take moral clues from legislation. As I see it, legislation can be downstream from morality, but never upstream from it (i.e., legislation derives from morality, which may cause them to be similar; but one should never derive morality from legislation).

In this particular case, it was extra curious because the ruling had just changed the law. If anything, the woman should be shouting Marriage is between two people of any sex. It’s the Law of the land!

In general, the “law=morality” heuristic (“heuristic” is a fancy word for “rule of thumb”) has the effect of adding a lot of inertia to political systems, which is most often not a bad thing. In this particular case, it is arguing for gay marriage.

Therefore, it doesn’t surprise me that support for Proposition 8, which would over-ride this ruling and deny gays the right to marry, is waning. People are taking their cues from the law, acting small-c conservatively, and accepting gay marriage.

Bob Barr, the Libertarian Party’s nominee for president, has filed a lawsuit in Texas demanding Senators John McCain and Barack Obama be removed from the ballot after they missed the official filing deadline.

[...]

Texas election code §192.031 requires that the “written certification” of the “party’s nominees” be delivered “before 5 p.m. of the 70th day before election day.” Because neither candidate had been nominated by the official filing deadline, the Barr campaign argues it was impossible for the candidates to file under state law.

[...]

“The facts of the case are not in dispute,” says Russell Verney, manager of the Barr campaign. “Republicans and Democrats missed the deadline, but were still allowed on the ballot. Third parties are not allowed on the ballot for missing deadlines, as was the case for our campaign in West Virginia, yet the Texas secretary of state’s office believes Republicans and Democrats to be above the law.”

Funny people, these Libertarians.

If they read some Hayek, they would perhaps appreciate that there is a fundamental difference between legislation (that which is written and passed by legislatures) and Law (that which one is expected to follow). While legislation certainly posits that all parties are equal and may even mandated that both major parties be taken of the ballot, the law is that the two major parties are different and will never be taken off the ballot.

They are, of course, correct in complaining that the Law (and often, the legislation) is discriminatory against third parties. This lawsuit is about showing this discrimination more than anything else.

However, such tactics rely on their being some amount of grass-roots outrage that the Libertarian Party (or the Constitution Party or some other Guns-and-Bitterness Party) was taken off the ballot. There isn’t any. This is no more than amusement.