Daily Archives: June 14, 2009

I’ll do it for a tenth of that

Cravath Swain is offering incoming lawyers $80,000 to go see Europe for a year and come back in September, 2010. I’m not saying I was Cravath quality, guys, but my LSATs were there and I wasn’t entirely stupid – I could have made coffee and supervised a few paralegals and even squired clients around the golf course – in fact, aside from the coffee making, which is a bonus I’d have tossed in, I’d have been just like a senior partner. But not for the ridiculous sum of $80,000 per year. Call it $8,000, retroactive to 1981, and I’m yours. In fact, I’m not only yours, you’ll never see me anywhere near the office (like those senior partners again). Got my address?

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Cheney may be in a secure, undisclosed location but we know where Gore is

Chicago enjoys coldest June since record keeping began. 12 degrees colder than last year.

Around the globe, crops threatened by cold weather.

I’ve long since dismissed Newsweek as a reliable source of information but it’s possible that their cover story back in 1975 warning of “The Coming Ice Age” might have been more prescient than their latest fear campaign against global warming. Different editors then.

Here’s a taste of what we “knew” then.

There are ominous signs that the Earth’s weather patterns have begun to change dramatically and that these changes may portend a drastic decline in food production — with serious political implications for just about every nation on Earth. The drop in food output could begin quite soon, perhaps only 10 years from now. The regions destined to feel its impact are the great wheat-producing lands of Canada and the U.S.S.R. in the North, along with a number of marginally self-sufficient tropical areas — parts of India, Pakistan, Bangladesh, Indochina and Indonesia — where the growing season is dependent upon the rains brought by the monsoon.

The evidence in support of these predictions has now begun to accumulate so massively that meteorologists are hard-pressed to keep up with it. In England, farmers have seen their growing season decline by about two weeks since 1950, with a resultant overall loss in grain production estimated at up to 100,000 tons annually.

During the same time, the average temperature around the equator has risen by a fraction of a degree — a fraction that in some areas can mean drought and desolation. Last April, in the most devastating outbreak of tornadoes ever recorded, 148 twisters killed more than 300 people and caused half a billion dollars’ worth of damage in 13 U.S. states.

To scientists, these seemingly disparate incidents represent the advance signs of fundamental changes in the world’s weather. Meteorologists disagree about the cause and extent of the trend, as well as over its specific impact on local weather conditions. But they are almost unanimous in the view that the trend will reduce agricultural productivity for the rest of the century. If the climatic change is as profound as some of the pessimists fear, the resulting famines could be catastrophic.

“A major climatic change would force economic and social adjustments on a worldwide scale,” warns a recent report by the National Academy of Sciences, “because the global patterns of food production and population that have evolved are implicitly dependent on the climate of the present century.”

A survey completed last year by Dr. Murray Mitchell of the National Oceanic and Atmospheric Administration reveals a drop of half a degree in average ground temperatures in the Northern Hemisphere between 1945 and 1968. According to George Kukla of Columbia University, satellite photos indicated a sudden, large increase in Northern Hemisphere snow cover in the winter of 1971-72. And a study released last month by two NOAA scientists notes that the amount of sunshine reaching the ground in the continental U.S. diminished by 1.3% between 1964 and 1972.

To the layman, the relatively small changes in temperature and sunshine can be highly misleading. Reid Bryson of the University of Wisconsin points out that the Earth’s average temperature during the great Ice Ages was only about seven degrees lower than during its warmest eras — and that the present decline has taken the planet about a sixth of the way toward the Ice Age average.

Others regard the cooling as a reversion to the “little ice age” conditions that brought bitter winters to much of Europe and northern America between 1600 and 1900 — years when the Thames used to freeze so solidly that Londoners roasted oxen on the ice and when iceboats sailed the Hudson River almost as far south as New York City.

Just what causes the onset of major and minor ice ages remains a mystery. “Our knowledge of the mechanisms of climatic change is at least as fragmentary as our data,” concedes the National Academy of Sciences report. “Not only are the basic scientific questions largely unanswered, but in many cases we do not yet know enough to pose the key questions.”

 

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Al Qaeda terrorists caught hacking phones to fund activities

Too complicated to relate here, but the WSJ has a fascinating article today on this ring that stole $55 million by hacking into phone systems and reselling the time. The conspiracy stretched from the Philippines to the U.S. to Italy and thence Pakistan and North Africa. One disheartening note for those of us upset by the Obama Administration’s decision to return to the Clinton era and treat terrorism as a criminal matter, rather than a war: three of the Al Qaeda terrorists seized this morning in the Philippines had been caught before – they were out on bail. You don’t release enemy combatants on bail, nor do you read them Miranda rights when you capture them in Afghanistan. Under our new policy, we do.

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Will Dick Blumenthal be our next Senator?

I saw our AG jogging up Clapboard Ridge this morning and, eschewing the chance to change the course of history, I kept my wheels straight. The man’s no Arch Duke Ferdinand and I’m no anarchist (on my better-behaved days). But I did wonder whether I was passing the next senator from our Nutmeg state, especially in light of the current occupant of that post’s continued difficulties with acknowledging and dealing with his crooked ways. I’ve ranted on this blog for months about Dodd’s shady purchase of his Irish cottage and that story, as well as his under-the-table dealings with Countrywide Mortgage, keeps getting worse. Here’s the latest from the Hartford Current.

The Los Angeles Times published a blunt analysis of the dense legal minefield around Mozilo. It must have made for chilling reading inside Dodd’s fortress. The Times reported “an FBIinvestigation includes a probe of his company’s role in an influence-peddling scandal involving U.S. Sen. Christopher J. Dodd (D-Conn.).”

The Friends of Angelo sweetheart deals have attracted the attention of prosecutors in Los Angeles and officials at the Justice Department in Washington. A lawyer familiar with the investigation of the Friends of Angelo scheme told the Times “the Justice Department appeared to be investigating whether the program amounted to improper influence-peddling by Countrywide and whether the politicians had failed to publicly report favors from Mozilo.”

The Times suggests a familiar way out for the beleaguered Mozilo: trade testimony about the Friends of Angelo for a deal with prosecutors and other authorities.

With the political atmosphere heavy with suspicion, Dodd obtained a new appraisal on his 10-acre waterfront home in Ireland after the unusual circumstances around his ownership of it were raised in this column in February.

Dodd said Friday that a recent appraisal puts the value of the Irish Shangri-La at $658,000. That value is more than two years into the historic crash of the Irish real estate market. The maximum value of $250,000 that Dodd has been reporting each year in his Senate disclosure since 2002 — when he bought the two-thirds interest of his partner in the property, Kansas City, Mo., real estate developer William Kessinger — was seriously and repeatedly understated.

In 2002, the property was likely worth at least as much or possibly more than it is today. Dodd’s office said in February that in 2002 he paid Kessinger, the friend and business associate of boulevardier and convicted insider trader Edward Downe, for whom Dodd secured a presidential pardon in 2001, $127,000 for his interest in the property. In March, he raised that by $50,000 in an interview with reporters from The Courant.

Last month, Dodd told Newsweek he paid Kessinger $207,000. While Dodd continues to revise the details of that 2002 deal, an immutable, nagging fact remains: Dodd appears to have received from Kessinger a gift of hundreds of thousands of dollars, which he never reported, in the year after Dodd obtained a presidential pardon for their friend Downe.

Documents Dodd signed and filed with the Land Registry in Ireland at the time of the 2002 transaction state the “consideration”— payment — for Kessinger’s share of the property was $122,351. Friday’s confirmation of the value of property in Ireland, which Dodd has sought to downplay, raises more serious questions about how Dodd has used his office.

There are stories of Dodd’s more carefree bachelor days when he and his pal Teddy Kennedy would head south to the Caribbean with a posse of hookers, charter a yacht and head ten miles offshore to party the week away while staffers, assigned to smaller craft, kept their distance and continued their work. Someone should be able to find a former Dodd staff member to confirm this – the resentment and hatred of their boss is still palpable.

But aside from Dodd’s taste in entertainment, I’d like to know who paid for these excursions? I have, in my various careers, occasionally made more than a U.S. Senator is paid yet I’ve never been able to afford a motor yacht charter in the Caribbean for my family, let alone paid companions and a flotilla of staff workers astern.

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But my house is special!

I just ran into a friend here in Old Greenwich and he complained to me that his house, while receiving several offers, still hadn’t sold. “Where were the offers?” I asked. “In the 9’s.”  I know his house so I advised him, “take it”. “No no,” he inisted, “I want a million, and I don’t care what the market’s doing.” I hope he enjoys his house.

Frankie Futter is in the office with me this morning, crunching numbers. Here are some god ones: In the $3-$ million range, we have 172 houses. Four have sold this year, for a 21 year absorbtion rate. “Okay,” you say, “but the market’s going to come back.” If we increase our sales 5X, we still have a 4.5 year inventory. It’s possible we’ll see a fife-fold increase in activity, I suppose, but I’ve never sen that kind of jump before.

In the $4 to $5 million range, we have 112 offerings. Two have sold this year. That’s a 28 year absorbtion rate or, if that mythical 5X jump occurs, a 5.6 year inventory.

In the $6 million plus market, there are 94 houses for sale. Five hold sold this year, for a nine-year absorbtion rate.

Rosy predictions of only a 21-year-inventory ignore the shadow inventory lurking in the wings. When the houses pulled off and rented (see below) come back on, and when, if, the market picks up, count on several hundred more houses joining the fray. Hmm.

So what are people doing? Well, we have seen 50 houses rented this year for more than $9,000, and 20 of those were houses built in 2006 and later. That’s one way to remove inventory temporarily, but spec builders usually don’t calculate their profit/loss numbers based on building rental housing. The pain is being deferred here, but it’s coming nonetheless.

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The New York Times acknowledges the obvious

Something’s got to give in Medicare spending.

MEDICARE expenditures threaten to crush the federal budget, yet the Obama administration is proposing that we start by spending more now so we can spend less later.

This runs the risk of becoming the new voodoo economics. If we can’t realize significant savings in health care costs now, don’t expect savings in the future, either.

It’s not the profits of the drug companies or the overhead of the insurance companies that make American health care so expensive, but the financial incentives for doctors and medical institutions to recommend more procedures, whether or not they are effective. So far, the American people have been unwilling to say no.

Drawing upon the ideas of the Harvard economist David Cutler, the Obama administration talks of empowering an independent board of experts to judge the comparative effectiveness of health care expenditures; the goal is to limit or withdraw Medicare support for ineffective ones. This idea is long overdue, and the critics who contend that it amounts to “rationing” or “the government telling you which medical treatments you can have” are missing the point. The motivating idea is the old conservative chestnut that not every private-sector expenditure deserves a government subsidy.

Nonetheless, this principle is radical in its implications and has met with resistance. In particular, Congress has not been willing to give up its power over what is perhaps the government’s single most important program, nor should we expect such a surrender of power in the future. There is already a Medicare Advisory Payment Commission, but it isn’t allowed to actually cut costs.

Scholars have been applying comparative-effectiveness research to Medicare for years, and the verdict is not altogether pretty. It turns out that some regions spend more on Medicare than others — sometimes two or three times as much, as documented by the Dartmouth Atlas Project. Yet the higher-spending regions often fail to produce superior health care results.

Robin Hanson, professor of economics at George Mason University, surveys evidence demonstrating the ineffectiveness of many medical expenditures in his 2007 paper, “Showing That You Care.”

If we are willing to take comparative-effectiveness studies seriously, we could make significant cuts in Medicare costs right now. We could cut some reimbursement rates, limit coverage for some of the more speculative treatments, like some forms of knee and back surgery, and place more limits on end-of-life-care.

Those cuts alone will not solve the fiscal problem, but if we aren’t willing to take even limited steps to conserve resources, we shouldn’t be spending any more money elsewhere.

Of course, we have not made such Medicare spending cuts yet, and there are few signs that we will. A Kaiser Family Foundation poll found that 67 percent of Americans believe that they do not receive enough treatment and that only 16 percent believe that they have received unnecessary care. If the Obama administration covers more people with government-supplied or government-subsidized insurance, the political support will broaden for generous benefits, their continuation and, indeed, expansion of current expenditures.

Suggested ways to lower costs include an emphasis on preventive care, the use of electronic medical records and increased competition among insurers. But even if these are likely to improve the quality of care, they are speculative and uncertain as cost-saving measures. Keep in mind that while computers were remarkably powerful inventions, it took decades before they showed up in the statistics as having improved productivity in the workplace.

The demand for universal coverage sounds like a moral imperative to “take care of everybody,” but in reality it would make only a marginal difference when it comes to the overall health of the American population. The sober reality is that universal coverage is another way to spend money, which may or may not be a good idea.

The most likely possibility is that the government will spend more on health care today, promise to realize savings tomorrow and never succeed in lowering costs. It is rare that governments successfully cut costs by first spending more money.

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“If they have time for feminist theory, they can find time for Edmund Burke”

Excellent essay on the sorry state of what passes for political science study in today’s colleges. When I studied political philosophy, I read everything from Karl Marx to Adam Smith, Hume to Locke, Friedman to Galbrath, Von Hayek and Von Mises, John Rawls to Gary Robert Nozick, and so on. None of that is that is taught any more (except Marx, probably) and we wonder at the low level of political discourse in society. I will admit to one gap in my learning: I never took a single course in deconstructive literature or the feminist view of capitalism. My loss, I’m sure.

(h/t, Instapundit)

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