Inflation That's Causing Deflation: Some Not So Very Good News For the Real Estate Market

Inflation, deflation, stagflation: A little bit of inflation might be good for the economy, but too much is bad, as are deflation and stagflation.

In some ways that does not bode well for the national real estate market. It looks like we may, for a while, be experiencing the worst of all three of these economic problems. While real estate is often thought of as hedge against inflation it isn’t a hedge against the kind of inflation we are about to talk about: Inflation that causes deflation in the real estate market.

A Depressing Review Respecting the Concerns About Classic Deflation

Most people understand that what was going on during the Great Depression was not good news. It was a vicious cycle and the problem was deflation. The economy seriously slowed. Jobs were lost everywhere. As a result the prices of everything declined. If you were holding cash that was good because your cash was more valuable. But if you had to pay a mortgage, or rent property you were in trouble because you were now obligated to make payments that were effectively, in real terms (adjusted for deflation), more expensive than what you had originally agreed to, more than what you originally bargained for. The result: You might be propelled into a default. In fact, thinking it over, you were given a good reason to default on your obligations; your home, the property you were paying the mortgage on, was no longer worth as much as you once agreed to pay for it.

Deflation, Unemployment and Low Wages

Defaults then generated the vicious cycle mentioned. Spreading defaults meant that foreclosed upon properties flooded the market, lowering property prices still further- - adding to the deflation which would in turn again cause more defaults and around and around you could go. The slack could be picked up by increased employment but that is not what happened and there is a problem with expecting an uptick in employment in that situation. Deflation contributes to further unemployment and lower salaries and so that also becomes part of the vicious cycle. Generally, real estate price downturns follow rises in unemployment with a generous lag in time. But a slow real estate market contributes to unemployment.

The Money Supply and Keeping Deflation At Bay

Everyone knows that deflation is not good for the economy. It is a trap to be avoided. The way to stay out of that trap is to pump up the money supply enough so that prices don’t go down. That’s what the federal government via the Federal Reserve was trying to do with its effort at monetary easing, the last go-round known as QE2 for “quantitative easing, the second round.”

QE2's Fine Calibration: Walking the Line Between Staving Off Deflation and Causing Overheated Inflation

The Fed is was trying to finely calibrate the easing so that there would be enough additional money in the system to keep the economy moving and avoid deflation but not, on the other hand, overheat the economy with runaway inflation. It is to be remembered that a lot of money has already been pumped into the U.S. economy with the stimulus packages, and like the Vietnam era, with heavy spending on wars paid for with debt, not taxes (which led to high inflation after the Vietnam war). So it is quite possible that one day inflation could really take off.

Funded Inflation. . .

In fact, the Fed’s quantitative easing has, indeed, helped fund some inflation. The problem with the Fed’s quantitative easing, however, is that, aside from the fact that some felt it was too timidly restrained, its potential for deflecting deflation in the housing market was sapped as prices rose, particularly in two other areas: Fuel and food. The price of food is going up (with world food prices hitting a record in January) largely because of global climate change events. What are people to do when the price of eggs goes up 50%? The price of fuel is going up because we are still relying on the fossil fuels causing the climate change. And because we are importing so much of the oil, American employment doesn’t go up when those prices do. Instead, American employment goes down. The price of raw materials, including rare earth elements are also going up as other countries economies compete (out-compete?) with our own economy for them.

. . . Accompanied by Deflation

To the extent that the inflating prices driven by the inelastic demand for relative necessities like food and fuel absorb increases to the money supply intended to deflect the possibility of deflation we can get the worst of all possible worlds: Overall, we can have inflation as people shell out to pay for what are largely necessities, with things like oil being imported, while no money is left over for the more discretionary expenditures like the bigger and bigger homes in which Americans have been choosing to live in the last several decades, which means a continuing cycle of deflation and unemployment in those home sectors of the economy.

Consumer Income is Deflating For Most Americans

The inflation means consumers have less to spend in real terms overall. Over the last year, prices are up by 3.2 percent but average hourly earnings were only up 1.9 percent during the year. (See: U.S. wages can't keep up with consumer prices, Marketplace Morning Report, Friday, May 13, 2011.) So, consumers are losing ground financially with less real income to spend even before most of what they do extra to spend is directed to the rising fuel and food costs.

For most Americans whose principal income comes from wages rather than investments the decline in real purchasing power is exacerbated by the fact that they are on the short end of growing income inequality.* They have less comparative purchasing power as wage income declines relative to income overall which includes investment income. Recently released figures for March show that the rise in wage and salary income was only 0.3 percent but the rise in income overall was 0.5 percent. (See: Consumer spending rises on higher prices, Marketplace Morning Report, Friday, April 29, 2011.)

(* Today the top 1 percent takes in more than 20 percent of the nation’s income, in fact, almost a quarter of all the nation's income in any given year and controls forty percent of the country's wealth. Meanwhile, the bottom 40% of the country currently has only 0.3% of the nation’s wealth. According to Professor John Quiggin: “the vast majority of benefits of economic growth have gone to people in the top 10 percent of the income distribution. Within that 10 percent, the top 1 percent has done much better than the remaining 9 percent, and within that 1 percent, the top tenth of a percent has done even better.”)

Stagflation and the Real Estate Market

Remember the “stagflation” of the 70s? That’s essentially what we are experiencing again. The stagflation fo the 70s was when we learned that inflation and recession were not mutually exclusive, as previously believed. Back in the 70's under Nixon sharp increases in oil and food prices were both an issue. What you get: 1.) slow economic growth, 2.) high unemployment, 3.) rising prices, 4.) economic stagnation. That’s the classic view. Here is something this discussion is looking to add to the list: “5.) falling real estate prices.” That’s because the rising prices are confined to the inflation of the prices for other commodities out-competing real estate (and often not factored or considered to be part of the core inflation being measured).

Profit might go up in the oil sector as the energy firms take a tithing on all the additional cash flowing through that part of the economy, but persistence of the situation described above won’t be good for the real estate market.

Proving Numbers

Do we see any empirical proof of this?

According to the Zillow home price index home prices have been drastically declining since June of 2006. (See: First Quarter Brings More Dismal News for Housing Market, May 8, 2011, Katie Curnutte from which the chart above- similar to the one appearing below- is extracted.) Home values fell again last quarter by about three percent. 1.5 million homeowners are seriously delinquent on their mortgages. 2 million homes are in foreclosure. (See: U.S. home values fall 3%, By David Gura, Marketplace Morning Report, Monday, May 9, 2011 and Housing numbers continue to slide, Marketplace Morning Report, Monday, May 9, 2011.) Zillow is now predicting that the real estate market won’t bottom out until 2012, “at the earliest.”

Here are two other related Marketplace reports:

When will housing climb out of the recession?
Marketplace Morning Report, Monday, May 9, 2011

When will we hit bottom in the housing market?
Marketplace Money, Friday, April 22, 2011

Proving Exceptions?

The exceptions to this bad news?: Places where there is employment. Also, government policies that temporarily intervened with subsidies to boost home sales positively influenced the housing market for the brief while that they were in effect, but it is not necessarily a good thing that these policies artificially postponed reckoning with a final bottoming out of the market necessary to reflect low employment. Nor is it likely a good thing that there is now an oversupply of housing resulting from the bubble that ensued when the government pumped money into the housing sector with aggressively lowered interest rates and unregulated and unwise subprime mortgage lending.

Affordable Housing, But For Whom?

The silver lining of the oversupply is, arguably, that in the end it will be good for people looking for more affordable housing. . . . But that only works if such families have managed to retain jobs or income sufficient to afford even those lowered prices. Also remember that to the extent that there has been inflation in other areas of the economy such as food and fuel (accompanied by low interest rates on bank deposits), those on fixed incomes or retirees living on invested savings have actually had their incomes effectively reduced. (See: Low interest rates have costs, not just benefits, by Bob Moon, Marketplace, Tuesday, April 26, 2011.)

If you want to hear another perhaps facetiously contrarian point of view go to this article to consider the argument that substantial money is actually being pumped into the national economy (possibly to the tune of $50 billion) by defaulted homeowners living cost-free in the homes on which they no longer are paying the mortgages: 'Squatter rent' may benefit the U.S. economy by $50 billion, Marketplace, Friday, May 6, 2011.

An Oddball Silver Lining Theory

The proponent of this idea, Michael Feroli, chief U.S. economist at JPMorgan Chase, calculates that with about 8 percent of mortgages of the nation’s 44 million mortgages being past due, there is about $800 billion in mortgage payments that are past due, so that about $50 billion per year can be redirected by the defaulting mortgagor families and is therefore “free for other purposes.”

For Mr. Feroli’s theory to work it has to mean that this money is more beneficial when spent by the defaulting families directly rather than had they paid what was owed to the banks to have them do with what they would. Mr. Feroli supposes that the families being in dire economic straits will quickly spend the money on necessities. Conversely, if the banks aren’t paid they might fail, in which case the FDIC picks up the tab at taxpayer expense. The Marketplace coverage doesn’t say what Mr. Feroli thinks happens if the banks simply stay afloat without getting the money. Is he presuming that banks are tending to just sit on money these days?

In Late April S&P Case-Shiller Home-price Index Precursed Zillow's Early May News

Here from another Market Place segment that covered the latest S&P Case-Shiller home-price indexes figures showing a drop in prices at the end of April:

the amount of housing production that's taking place . . . . went below the 50-year-low level. That's a depression for the housing sector. It's been down 30 months at low levels, and it's because the demand is not there.

(Home prices continue to drop, Marketplace Morning Report, Tuesday, April 26, 2011)

See also this Marketplace story about the release of those Case-Shiller index figures which emphasizes how lower home prices translate into reduced consumer spending: Home prices going down, by Nancy Marshall Genzer, Tuesday, April 26, 2011.


And a NPR Planet Money post (which provided the chart above by Alyson Hurt/NPR) extracts these points out of those Case-Shiller report numbers:

• Home prices fell by 1 percent between October and November (according to Case-Shiller's 20-city composite).
• Prices fell in 19 out of the 20 cities tracked by the index between October and November.
• Prices fell by 1.6 percent between November of 2009 and November of 2010.
• Home prices fell in 16 out of 20 cities between November of 2009 and November of 2010.
• Eight cities hit new, post-bubble lows in November: Atlanta, Charlotte, Detroit, Las Vegas, Miami, Portland, Seattle and Tampa.

(See: Home Prices Keep Falling, January 25, 2011, by Jacob Goldstein):

If you go to the that article you will also see a table of home prices in the 20 metro areas tracked by the monthly Case-Shiller report.

The Glutting Oversupply of Homes

Perhaps if Americans had more jobs and at better salaries there wouldn't be such an oversupply of housing, but as things now stand, there is a glut of homes people can't afford and that glut stands in the way of a bottoming out of home prices and their eventual recovery. It's a problem in cities across the country such as "Detroit, Las Vegas, Miami, Phoenix and Tampa." In some cities the statistics are truly astounding. For instance, in Miami three out of five homes sold there are foreclosures or short sales:

Foreclosures have flooded the market in Miami. Three out of five homes sold there are foreclosures or short sales. (Short sales occur when lenders allow homes to be sold for less than what's owed on the mortgage.)

(See: Bargain Prices Help Reduce Glut Of Foreclosures, by The Associated Press, April 26, 2011.)

Three out five homes? That's 60% of the market. And that's recent news.

Skittish Banks

The oversupply and this dire picture leaves banks skittish. When, as a result, they refuse to provide financing there is less capital in the market to finance transactions that aren't foreclosures or short sales. (See: Housing market faces headwinds, by Janet Babin, Marketplace, Monday, May 9, 2011.) The banks have good reason to be skittish with fraud in the housing lending market increasing.

The Latest Bad News

It looks like there may be even more bad news piling on. It is reported that the federal government which “last year backed nine out of 10 new mortgages nationwide” is likely to stop providing government backing for larger loans. For three years now government agencies like Fannie Mae have been backing mortgages as large as $729,750 which, in high-cost areas like New York could be for a not very big apartment (and what it costs to build one). If government backing drops back down to $483,000 it could definitely drag down the market in those high cost areas like New York, California, New Jersey, Connecticut and Massachusetts. (See: Federal Retreat on Bigger Loans Rattles Housing, By David Streitfeld, May 10, 2011.)

Yo-Yo Federal Policy

If prices do get dragged down it will be another example of questionable government policies to support the housing market. There is nothing necessarily wrong with subsidizing the housing market, and backing mortgage loans may be a good strategy to do that. Maybe high-price loans should be excluded from support and there are certainly countervailing arguments that populations living in higher-cost areas of the country should not be discriminated against. If there is a cut-off point for federal backing it should escalate over time as prices rise. What is highly undesirable, however, in terms of federal housing subsidy programs are in-again-out-again strategies, because without consistent commitment the market will only yo-yo, ending on the downside when they come to an end.

As it is, we have already been waiting a very long time to find out where the actual bottom of the market is after the ending of the last set of temporary federal housing subsidies were terminated.

What's the best federal strategy to boost prices in the housing market? It's the obvious one: The federal government needs to create an economy that generates more and higher-paying jobs.

Social Security Inequation: This is Rich, Living Longer While Everyone Else Enjoys It Less; Putting Two Together

Here are two stories I came across that seemed like they absolutely had to go together. Since I’ve not seen anyone else pairing them, we’ll do it here. One is from economist Paul Krugman, the other from Robert Reich, also an economist, and the former Secretary of labor under President Clinton. Each concerns Social Security, the wealthy and why the system may not be anywhere as close to insolvency as some (are they all Republicans?) would have the rest of us presuppose.

Krugman: Some of Us Are Living Longer- The Rich

The Krugman piece was the first to catch my eye back in November. It concerned the suspect work product of the National Commission on Fiscal Responsibility and Reform tasked with finding a supposedly bipartisan solution to the nation’s fiscal problems. (See: The Hijacked Commission, by Paul Krugman, November 11, 2010.)

The commission announced its plan November 10th. As Mr. Krugman points out, the section of the plan on tax reform was summarized in seven bullet points the last of which was “Reduce the Deficit” while the first was “Lower Rates.” The commission was, in fact, all about tax reduction being a priority, stating that one of its “Guiding Principles and Values” was to “Cap revenue at or below 21% of G.D.P.”

Krugman writes many great articles, but this was one of his best. The whole article is worth reading but for purposes of this National Notice story what caught my eye about Social Security was this:

Let’s turn next to Social Security. There were rumors beforehand that the commission would recommend a rise in the retirement age, and sure enough, that’s what Mr. Bowles and Mr. Simpson do. They want the age at which Social Security becomes available to rise along with average life expectancy. Is that reasonable?

The answer is no, for a number of reasons — including the point that working until you’re 69, which may sound doable for people with desk jobs, is a lot harder for the many Americans who still do physical labor.

But beyond that, the proposal seemingly ignores a crucial point: while average life expectancy is indeed rising, it’s doing so mainly for high earners, precisely the people who need Social Security least. Life expectancy in the bottom half of the income distribution has barely inched up over the past three decades. So the Bowles-Simpson proposal is basically saying that janitors should be forced to work longer because these days corporate lawyers live to a ripe old age.

Reich: Some of Us Are Paying Less Into the Social Security System- The Rich

The Krugman statistics about who, exactly, is living longer came to mind when I came across the Robert Reich piece, the basic point of which was that there is no problem with the solvency of the Social Security system except that the wealthy are now paying proportionately less into than ever before and because “Now a much larger portion of total income goes to the top -- almost twice the share they got back then.” (See: How to fix Social Security, Marketplace, Wednesday, February 23, 2011.)

As Reich points in his commentary on Marketplace and in a column that appeared a number of places, including in the Christian Science Monitor and the Huffington Post (Budget baloney: Social Security isn't to blame for deficit, and the Best Way to Fix It Permanently, February 16, 2011) the solvency question was addressed and supposed to have been dispensed with by Alan Greenspan’s Social Security commission back in 1983 by gradually increasing payroll taxes and raising the retirement age.

Why hasn’t the Social Security system stayed in balance and “fixed for good” as Alan Greenspan’s 1983 commission expected? Reich explains that it is all due to fact a shift of income to wealthier Americans who pay proportionately less to Social Security because their contributions to the system are capped after they earn more that $106,000:

The Commission assumed that, as the ceiling rose with inflation, the Social Security payroll tax would continue to hit 90 percent of total income.

Today, though, the Social Security payroll tax hits only about 84 percent of total income.

It went from 90 percent to 84 percent because a larger and larger portion of total income has gone to the top. In 1983, the richest 1 percent of Americans got 11.6 percent of total income. Today the top 1 percent takes in more than 20 percent.

Putting Two Together

In other words, putting Krugman’ and Reich’s points together, the wealthy are living longer, longer then the rest of us, presumably getting more Social Security benefits paid out to them as a result, while at the same time they are paying proportionately less and less of their income into the Social Security system. And the system is becoming unbalanced because the wealthy are hoarding a greater and greater proportion of the nation’s income, thus subjecting an increasing amount of that income to an artificial cap that’s now limiting how much of the nation’s income is going to support Social Security to a lower percentage than everyone expected when things were last put in balance. . . That’s because in 1983 no one expected the degree to which income inequality would increase in the last 28 years.

Solutions Within Reach

Reich points out that the solution for balancing the system is therefore easy. Since the whole problem is that the shift in income to the wealthier earners has exempted more national income from going into the system by virtue of that cap on the ceiling income over which wealthier earners are exempted from paying into the system, all you have to do is raise that ceiling. Then the percent of income being subject to Social Security contributions will go back to the percent it used to be:

If we want to go back to 90 percent, the ceiling on income subject to the Social Security tax would need to be raised to $180,000.

Presto. Social Security’s long-term (beyond 26 years from now) problem would be solved.

That’s the easy solution. Another solution Reich doesn’t mention would be to reverse the unexpected trend in income inequality. Do wealthiest earners really need to be earning twice the share of total national income they were earning back in 1983? Does the top 1 percent in the country need to now be earning "more than 20 percent" of the nation's total income instead of the 11.6% that very lucky and elite 1% was earning back in 1983?

Those two possible solutions both involving asking for a contribution from the longer-living (and greater benefit-collecting) rich aren’t the ones being talked about however. For some reason, increased taxes for the well-to-do always seem to be off the table. Instead, what is being talked about is having the rest of the public shoulder the extra burden resulting from the increasing income inequality. As Krugman noted, the National Commission on Fiscal Responsibility and Reform is suggesting an increase in the retirement age. Alternatively, benefits might be reduced.

As for Reich’s suggested solution, Reich makes this point:

Not incidentally, several months ago the White House considered proposing that the ceiling be lifted to $180,000. Somehow, though, that proposal didn’t make it into the President’s budget.

“I Am a Republican When”- - Time Traveling to Look at the Drift of Republican Party in 2004

This post is a time trip back to the 2004 presidential elections. I wrote and distributed the following essay in July of that year to catalog the reasons not even Republicans should have been voting for George W. Bush. (I also prepared and circulated the above pretzel visual at that time.)

In 2004 I was working in state government for a Republican administration.

Am I, or was I a Republican?

I grew up in family with a mixed political heritage, both Republican and Democrat. My father grew up in a home where President Franklin Roosevelt was referred to as "that damn man." By the 60s, time of the civil rights era (and an increasingly vexatious Vietnam) sentiment in the household where I was growing up had definitely swung mostly to the Democratic side. Personally, though there will always be a place in my heart for what I consider traditional Republican values that I deem to include a common sense respect for the workings of the marketplace and a wariness about exactly how much government can achieve when it chooses to intervene.

That meant that the right kind of Republican could gain my support. On the state level I worked with many Republicans I deeply respected. I particularly valued it when they were straighter shooters than some Democrats with whom I have worked.

The problem in 2004, as you will see from what I wrote below, is that the Republican party was drifting away from those traditional ideas. Where is the party now? That would be a good subject for a second essay but I would suggest that the drift away from traditional values begun then, has in many respects continued.

Here is was my evaluative catalog circa 2004:


I AM A REPUBLICAN! I AM A REPUBLICAN WHEN. . .


I think I think a lot like you.

I think I think a lot deeper than other people.

I also thought that invading Iraq might be a good thing if it were done the right way for the right reasons.

I come from a Republican-steeped heritage and I believe in Republican principles.

I vote Republican.

Why then, have I so often voted Democrat?

I AM a Republican when I remember that the Republican party was formed as an anti-slavery party. I am glad that we went on from there and that women now have the vote. I think that there still remains other prejudice and discrimination that needs to be eliminated.

I AM a Republican because I believe in a balanced budget.

I AM a Republican because, like Teddy Roosevelt, I love the environment. I have lived long enough so that each morning when I get up and look at my river and breathe my air I say thank you for the clean air and the clean water acts and I don’t want to go backward. I remember how it was.

I AM a Republican because I believe in Teddy Roosevelt, the Trust-Buster, and, like him, I think that government should be at least big enough to win when it takes on the fight with the conglomerates.

I AM a Republican because I believe in Northeastern values. I believe in progress and education and a vital modern evolving economy.

I AM a Republican because I believe in the power of free enterprise and the force and power of market forces. I AM a Republican when Capitalism defeats Communism and tears down a wall. I AM NOT a Republican when it means government regulation telling beef producers they are forbidden to test for mad cow disease as the market and consumers want.

I AM Republican because I believe in investment and effective use of our capital resources. Right now, in this time of changing technology and speeding progress, the best investment in this country I see is investing in the people of this country. By this I don’t mean tax cuts that strip money from the middle class and hand it to a rich minority that doesn’t need to squander it living in more luxury. I would like to see our capital invested in our own country, in our own people.

I AM a Republican because I believe in a strong economy and a strong Wall Street, but I ruefully and perplexedly recognize the statistics show that for years the economy has consistently been stronger under Democrats. I don’t know why this is, but I think it may have something to do with distribution of resources.

I AM NOT a Republican when the party of Lincoln panders to take in the Dixiecrat wing of the Democratic party. I remember why the Republican party was formed. I don’t like the Bob Jones University and other kinds of prejudice that people try and sell as Republican values.

I AM a Republican when it means hating Saddam Hussein and considering him a villain, just as the Democrats and I guess the rest of the world does. I AM NOT a Republican when Republicans advocate invading another country with no world support. I AM a Republican when we seek, even belatedly, UN and world support to help with what needs to be done in Iraq. I AM NOT a Republican when we oppose the United Nations in effective population control and AIDS-reduction measures.

I AM a Republican because I believe in a strong United States. I AM NOT a Republican when it means fostering and perpetuating an ever greater dependence on foreign oil.

I AM a Republican and believe in the Grand Old Party when it means believing in manners and good conduct, the real kind. I AM NOT a Republican when a bunch of adulterous fogey old men lead a hypocritical and expensive attack on a President’s private life that deserved to remain private.

I believe in sober, reasoned, careful thought. I AM a Republican when it means believing in where Darwin lead us and wanting stem cell research to lead to cures for Alzheimer’s, Parkinson’s and a panoply of other afflictions. I AM NOT a Republican when it means obliterating science and sex information from school text books. I AM NOT a Republican when it means ignoring global warming or not signing the Kyoto Accords. I AM a Republican who believes in the kind of science that Nobel Laureates can believe in.

I AM a Republican who is proud to see my Republican ancestors and Republican family dressed in their Union blues, their World War II Army, Navy, Air Force and Red Cross uniforms. I AM impressed by the soldiers who have been shot at, captured, died and killed. I AM NOT impressed by a service dodger and stay-at-homer who dons a Top Gun inform and declares a war won without recognizing that most of our soldiers have yet to die in a conflict. I have seen the photographs of our Civil War dead. I have seen the photographs of our World War II dead and of D-Day. I can think of no better way to acknowledge our debt to those who are fighting for us than to acknowledge the full measure of their sacrifice and I do not understand why pictures of flag-draped coffins must be banished from sight and mind in place of Fox-News-war-glitz and obliviating happy-talk.

I AM a Republican when it means being faithful to a belief in the separation of Church and State. I AM NOT a Republican when it means the hypocrisy of using “Faith Based” initiatives to discriminatorily, and secretly, funnel government money to a small fraction of Religious Right communities willing to believe only in Jesus. I AM NOT a Republican who, when told by the Italians July 4th week of year 2000, that Air Force One needs to be rerouted because terrorists plan to use a hijacked airplane as a missile to bring down the plane and who then maintains only a resolute, narrow and blind focus on delivering to the Religious Right and launching an attack on other people’s private life styles and draping “nude” statues in the nation’s Capital. I ache when the 9/11 Commission decries a “lack of imagination” as having not prevented the attacks.

I AM a Republican who when told the nation is under a phenomenal attack would have gotten up from reading “My Pet Goat.” I AM a Republican who does not get tied of swatting at flies and protects the nation. I AM NOT a Republican with a failure of imagination.

I AM a Republican who believes that the focus on the Religious Right that should be the focus of the highest quarters of our nation’s government is a focus on the fundamentalist Muslim Religious Right that wants to attack us, so that attacks can be imagined and prevented before they happen.

Separation of church and state is good enough for me to want to export to Iraq and it is good enough for me to want here at home. I guess I care more about this because when it comes to my faith there are things I believe, and I want to believe what I believe without being told what I have to believe.

I am a law and order kind of guy. I like my streets safe and I put stock in law enforcement and the police. I like DNA testing because it means that innocent go free which means we don’t stop pursuit of the guilty. I acknowledge and respect that people in Montana are going to want to carry the guns that can protect them; they have mountain lions there. I rather enjoy venison. I am aghast, however, by legislators who kowtow to the National Rifle Association so that we have laws that prevent us from doing anything about the fact that 100 percent of the guns used in crimes were sold by only 20 percent of Federally licensed firearms and that it has been possible to trace half of all the crime guns to just 1 percent of Federally licensed firearms dealers.

As a law and order guy, I am attracted to the idea of a national identity card, or at least a better way of getting on airplanes, and I think more along these lines and things to deal with terrorism should have been done a long time ago. But to whom do we give the Big Brother power? I don’t see putting it in the hands of John Ashcroft and his Ken Starr minions. I may want security but I am still a Libertarian and I don’t want the government investigating or telling me what to do in my sex life, especially when these people are wont to do such investigations as a way of “getting” someone.

As a law and order guy, I believe in a full complement of judges on the courts. I like my justice swift. But I believe in moderate judges. I don’t need a judge who tells me that the Bible requires women to be subservient to men, that in a marriage ''the woman is to place herself under the authority of the man'' and who scoffs “rape victims become pregnant as often as it snows in Miami.” These people don’t need to be nominated to the bench. They don’t need to be championed.

I understand that there is no clear scientific line to draw to say absolutely when human life begins, so I respect and understand my many fellow Republicans who conclude that life begins when their religion tells them it does, but I personally don’t believe a clump of cells is a human being or that stem cell research is wrong. If it is a question of finding judges to overturn Roe v. Wade, I am not interested. Like quite a few of my fellow Republicans, I believe in a woman’s right to choose. Further, if it is a question of finding judges to nominate who would strain not to follow established precedent, I think that is a way to wind up with judges who are incompetent or worse.

I don’t see why it’s not possible to govern from the center. After all, that’s where I am. It isn’t as if the last election wasn’t actually, in a number of ways, lost to the Democrats. And it can’t exactly be said that everything done to snatch victory from the Democrats was absolutely on the fair and square.

As a Republican I believe in limiting government because of the ability of government to make mistakes. This is why, as much as I hate criminals and love to lock them up and get them out of society, I think differently from a lot who think much like me, and I don't embrace the death penalty. Over and over again DNA testing has shown me how right I am about how wrong government can be. Whoever these people are I want them kept around so that the true story can always be told and the guilty pursued, and found. And as for those who are guilty I want them around long enough to tell me about their accomplices and their other crimes. - - Former Republican Governor Thomas H. Kean of New Jersey, chairman of the 9/11 commission
says about the Trade Center hijackers, “If there are unanswered questions, it is mostly because "the people who were at the heart of the plot are dead."

I thought that invading Iraq might be a good idea. I had Thomas Friedman hopes. To me it seemed that the Middle East has been sort of a Gordian knot. Even if we know now that the sanctions were working mostly the way they were supposed to, it also seemed that they were counterproductive in that they created poverty. I think that Middle East could really use a country that is an Arab success story, a country with freedoms and a working egalitarian economy. I don’t know why we haven’t been thinking about Afghanistan with these possibilities in mind, but that is something else to talk about.

While I thought that invading Iraq could be a good idea, I wasn’t sure I trusted that the way we were getting into the war was right. I wasn’t sure whether I detected a worrisome eagerness, an `I am going to finish my Daddy’s war' attitude.- - And I supported that other war with little reservation.- - I didn’t understand the way we were proposing to do this war, without world support. I didn’t understand why we couldn’t persuade. I was very worried that we were willing to tell the world that we newly believed a thing called a “preemptive war” was a thing the major nations of world could now consider themselves at liberty to launch after ages of that not having been the case.

But then there were the Weapons of Mass Destruction. I really believed that there were Weapons of Mass Destruction. I didn’t believe that there were Weapons of Mass Destruction because I just imagined that there were. I believed that there were Weapons of Mass Destruction because I was told that there were. I wasn’t sure about trusting the president, but I decided to trust the president on this. I had to trust the president. I had only one president to trust. Since 9/11, like it or not, I have had only one president to trust. And this was serious business. And so, I talked to many others who were seriously debating what we should do. I talked to people who had family members who were going to be amongst those sent to Iraq. We shared doubts about the way that this was being done. We thought it could be done better. But, on balance, because of the Weapons of Mass Destruction I counseled them that, even if we were not going to war in the best possible way, it was still the right decision.

Now I have found out how misinformed I was when I talked about Weapons of Mass Destruction. This was for one reason only. I trusted, and I was lied to.

This wasn’t the result of an accidental to-be-further-examined intelligence failure. I know enough about how government works to know how things go. The guy at the top gets what he wants. The guy at the top always gets mostly what he wants. Usually, the guy at the top gets essentially exactly what he wants. If the top guy wants bad ecological science from the Department of the Interior, the Department of the Interior is going to offer up bad ecological science. The top guy gets what he wants. I don’t blame the underlings for what happened at Abu Ghraib. If you take the guy in charge of Guantanamo and put him in charge of the Iraqi prisons, you will get predicable results. You will get Guantanamo prisons in Iraq.

Now what have we got? I listened when, at the press conference releasing the Joint Committee on intelligence failures, the committee said that we are now less safe from terrorism than before we went to war in Iraq. This is because of the way we went into the war. We went into a part of the world where oil is a volatile issue with an oil-company president and Halliburton no-bids-needed cynicism. We went in without world support for trumped-up, made-up reasons we were willing to lie to the world about. An then there is Abu Ghraib. It is nothing more than an invitation for the world to scoff at our professed sincerity and hate us.

As a Republican I am wary of government and its capacity for ill.

I am not enamored of government secrecy. My trust-busting friend Teddy Roosevelt, who wisely battled Standard Oil Co., would be very unhappy to hear about the shrouding in secrecy of all the meetings the oil industry is having with the nation’s administration to establish our country’s energy policy. The oil companies and the Enrons are the last ones who should be setting the nation’s agenda.

Growing up as a Republican, George Orwell was a hero of mine. I still hold his cautions worthy. - When it comes to governance, I do not consider it simple prankishness to give the title of “The Healthy Forests Initiatives” to a handing over of our National Parks to the lumber industry for clear cutting.

It is not a tolerable prank to call weakening the Clean Air Act the “Clear Skies Initiative.”

There are times, perhaps when I am a Democrat. I guess I am a Democrat when it comes to ready availability of health care because the Republicans have no plan. I think I am a Democrat on health care for Republican reasons: because not having portable health care when people want and need to change jobs is a drag on the economy. I guess, as a Republican, I would want the government to be able to shop around for the best deal on pharmaceuticals, but the national Republicans don’t want that. I guess that keeps me a Democrat on the subject of health care.

Yes, I AM a Republican. And I think I am pretty conservative.

I AM NOT a Watergate Republican.

I AM NOT an Iran Contra Republican.

I am absolutely certainly NOT a George W. Bush Republican- Impossible! The man embarrasses me, mightily. The man embarrasses me every single day.

Congress Not Doing Its Job? Job Creation Programs That Don’t- The American Jobs Creation Act and the EB-5 Program for Sale of Green Cards

If you are looking to learn about programs created ostensibly to create jobs where that is not happening because Congress has walked off the beat, here is a post on the subject provided via National Notice’s sister blog, Noticing New York: Saturday, March 26, 2011, The American Jobs Creation Act, Job Creation That Wasn’t: What Happens When Government Doesn’t Manage Its Programs.

The post deals with The American Jobs Creation Act and the EB-5 Program. Each is supposed to create jobs, the first as you can tell by its title. The EB-5 program, as the New York Times puts it is, “an obscure federal program that grants [“sells” is a better word] green cards in exchange for a $500,000 investment in a job-producing American project.” (See the post for more and links.)

In each case the program has been commandeered by big business simply seeking to financially line their pockets without providing jobs.

What Would George Santayana Say?

What would George Santayana say?: Should those who do not remember the past accurately be condemned for reenacting it? . . . . See: Marking Davis’s Confederate Inauguration, By Campbell Robertson, February 20, 2011.

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Also on the subject of history and the ability to remember it, see: The Doctor’s World: When Alzheimer’s Waited Outside the Oval Office (Reagan Memoir Raises the Difficulty of Confirming Alzheimer's Disease) By Lawrence K. Altman, M.D., February 21, 2011.

Ronald Reagan died of Alzheimer's Disease on June 5, 2004. His last day in office as President was January 20, 1989. According to this Times article, Reagan was diagnosed as having Alzheimer’s (a exceedingly difficult diagnosis to pin down) in 1993, four years after he left office and that Reagan began taking annual mental-status tests starting in 1990. These mental-status tests reportedly were started "a year after" a 1989 horseback riding accident after which a subdural hematoma blood clot removed from Reagan’s brain was examined and (this is confusingly not-quite-explained) may or may not have shown signs of the disease. Reagan’s disease was very much apparent by 1994 when he, with evident difficulty, wrote a letter to the American public announcing his retirement from public life because of his decline. Even if Reagan had been showing symptoms of the onset of the disease during his presidency it does not mean that he would have been rendered legally incompetent. What Reagan was or was not able to remember became a central topic of discussion during the Iran/Contra affair (and ensuing legal persecutions) that came to the public’s attention in 1996.

The recent HBO documentary "Reagan" by Eugene Jarecki spends a fair amount of time pointing out how the political Right has been consciously constructing a mythology about Reagan that is largely contrary to facts (in order to be consistent with their own agenda). The documentary cleverly uses Reagan’s own voice-over to inveigh against mythologies that ignore factual reality. The Jarecki documentary treats Reagan’s eventual dementia as being squarely outside of his span of years in office implying that there was no overlap.

This Is the Beginning of National Notice

I decided it was time to start a second blog. This post inaugurates it. My other blog is "Noticing New York."

Why am I starting a new blog? Noticing New York covers development in New York City and associated politics. As you might guess those associated politics can be rough and none too savory. Often enough they intertwine with national policy issues but there are also times when I feel impelled to write about themes that, while they may be tangentially related to New York City urban affairs, have no close connection with the beat I created Noticing New York to cover.

A perfect example is a recent Noticing New York post (which I will recycle as National Notice's first post-inaugural post): Tuesday, February 22, 2011, What would George Santayana say?

That post just wasn't Noticing New York material but I couldn't help writing it and I wanted it to be up and available somewhere. I realized that there is a lot more on my mind that I'd like to express and it all concerns national issues. . .

. . . So this will be my outlet.

Welcome to National Notice. I hope this will be an interesting and worthwhile journey for all of us.