People Who Walk Away from Their Houses

The Washington Post reports a new trend of people walking away from houses that they own. It misses the whole point, however. The problem is that these people paid little or no money down. Their mortgage payments were just rent payments, and unlike real rent payments, these were subsidized by the US government in the form of the mortgage interest tax deduction. People didn't do this years ago because they had skin in the game, starting out with about a $30,000 loss for walking away from a $150,000 home. Now they have nothing to lose except their credit rating for a year or two. They'll go from owning a four bedroom single family house to renting a two bedroom apartment that they can afford. No big deal, except for the banks that made these stupid mortgages and the investors who bought them. The heads of these banks, like Jamie Dimon at JP Morgan-Chase, are either very stupid or crooks. I don't think they are very stupid. But it's good when you can bribe (lobby) the lawmakers to make your immoral shenanigans legal.

I still think Tim Geithner, Hank Paulson and company deserve a lot of credit for avoiding another Depression, but now I think Geithner, who was head of the New York Fed, is too close to his old buddies whom he bailed out. Wall Street is evil. It almost destroyed America and much of the rest of the world with it. Somebody needs to pay for what they did.

MTCR 2011 Meeting

I look at the Missile Technology Control Regime (MTCR) as sort of my legacy from my days at the State Department. I was one of the main links between the idea to create a missile non-proliferation regime during the Carter presidency, and its actually coming into existence under Reagan.

So, I'm happy to see that it still exists and is functioning, as reported by this press release from its 2011 meeting.

Libya and Israel

The New York Times reported that Bernard-Henri Levy takes credit for persuading French President Sarkozy to enter the Libyan civil war on the side of the rebels. So how did that happen?

Part of the answer is what has been discussed in the press: The West -- particularly Hillary Clinton, Susan Rice, and Smantha Power -- felt guilty about how long it took for the US to interview in the genocide in Bosnia and Rwanda. They didn't want more genocide on their watch. Sarkozy is politically weak at home in France; some saber rattling would probably increase his favorability rating. I'm guessing Britain just went along with the US and France, and probably had some concerns of its own about genocide.

But I think there is more.

Levy is Jewish and proud of it. Sarkozy is something like one-quarter Jewish. The US is always under heavy pressure from Jewish lobbying. Israel would like to see instability in the Middle East countries that give it a hard time. Leading this category are Syria and Iran. Egypt and Mubarek, whom Israel liked, had already gone down the tubes. When Libya and Bahrain stood up to their protesters, it looked like the Middle Eastern spring opening might be in danger of being stopped before it could spread to countries where Israel wanted to see it overthrow the rulers, like Syria. So Israel encouraged the West through people like Levy and Sarkozy to stop Libya from putting down the protests there.

The NYT says that Levy was visiting Egypt and decided to go to Libya. Why? I think it's likely that the Mossad suggested he go, and set up the trip for him, which ultimately led to his meeting with Sarkozy, which led to the NATO/UN/West decision to support the rebels.

It's working. Protests are going strong in Syria, although the government continues to try to stop them. Assad may or may not survive. Not much has happened in Iran, but the protests throughout the Middle East put some pressure on it. It's not clear what effect the continuing civil war in Libya will have on Jordan and Bahrain, but they are lower priorities for Israel. Thus, to some extent, I think we are fighting (or giving air cover or whatever we're doing in Libya) for Israel. I think to a similar extent we partially fought the war in Iraq for Israel. Iraq with Scud missiles and possible WMDs was much more of a threat to Israel than to the US.

What About the Budget Deficit and the National Debt?

Anybody serious about solving the national debt/budget deficit problem has to consider both expenditure cuts and revenue increases. We should cut back some government programs, and we should increase some taxes. Until there is a serious debate about what to cut and what to tax, there is no serious effort to reduce the deficit/debt. S&P is right; the US is on a slippery slope towards bankruptcy.

On the expense side, people talk about Medicare and Medicaid, but they never mention doctors themselves. Many doctors are basically government employees with fees set by Medicare, but they earn much more than the average government employee, around $200,000 annually for doctors, compared with about $75,000 for federal government employees and about $50,000 for state government employees. Doctors who specialize in hot areas like cardiology or neurosurgery earn much more, often more than $500,000 annually. As a result, it is hard to attract doctors to lower paying, but more important areas like family practice. Somebody needs to come up with some original ideas for dealing with that, for example, using more nurse-practitioners to do triage, take care of simple things, and refer more difficult cases to specialists. Part of the problem is the cost of medical school. You can't ask students to incur thousands of dollars of debt for lengthy, expensive education and then take lower paying jobs. Government programs could subsidize medical education in return for an obligation to be a family practitioner, see "Northern Exposure." Also, one of the most expensive programs is the new drug assistance program under Medicare part D, passed under Bush. It is basically just a subsidy for the giant drug companies.

It's true that there is some unfairness about taxation. Some things are unquestioned duties of government: national defense, police, firemen, etc. Some are generally accepted and have been for a long time: public school teachers. Others are relatively new: extensive welfare programs. However, a legitimate comparison is how much people used to pay for these services and how much they pay today. Today, in general, federal taxes are much lower than they were fifty years ago, although they are higher than they were 100 years ago. A hundred years ago, people were still drinking milk with formaldehyde in it, starving to death if they fell on hard times unless some neighbor helped. If we are not rich enough to provide these services anymore, we need to have a debate what the most important services are and how we can maintain them. One area that has taken an enormous hit in recent years is education, particularly higher education, which has become more and more expensive. By cutting off universal access to higher education we are dooming ourselves to second class status among the nations of the world.