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Thursday, April 29, 2010

From our friends at

Iran Lays Out Its Terms

IRANIAN PRESIDENT MAHMOUD AHMADINEJAD said Tuesday he would be sending U.S. President Barack Obama a letter, the contents of which would be made public in the coming days. In a live interview on state television, Ahmadinejad said that Iran was the “only chance” for Obama to salvage his administration’s position in Iraq and Afghanistan. The Iranian president remarked, “The best way for him [Obama] is to accept and respect Iran and enter into cooperation. Many new opportunities will be created for him.”
This is not the first time Ahmadinejad has offered his American counterpart cooperation in an attempt to extract concessions. But he has never been so direct about telegraphing his view that the United States is in a difficult position in the Middle East and South Asia, nor has he offered Iran’s help so that the United States can extricate itself from the region. What is important is that the Iranian leader is pretty accurate in both his description and prescription.
Washington is indeed working toward a military drawdown in Iraq, and needs to make progress in Afghanistan within a very short time frame. Iran borders both these countries, where the Islamic republic has significant influence. Cognizant of Obama’s domestic political imperatives, Ahmadinejad said, “He [Obama] has but one chance to stay as head of the state and succeed. Obama cannot do anything in Palestine. He has no chance. What can he do in Iraq? Nothing. And Afghanistan is too complicated. The best way for him is to accept and respect Iran and enter into cooperation. Many new opportunities will be created for him.”
The Iranian president is correct in that a solution for the Israeli-Palestinian conflict is extremely unlikely. In terms of Iraq, the Iranians recently signaled that they are prepared to accept a sizeable Sunni presence in the next Iraqi coalition government. This will facilitate the U.S. need for a balance of power in Iraq, thereby allowing Washington to exit the country. Similarly, the Americans cannot achieve the conditions for withdrawal in Afghanistan without reaching an understanding with the Iranians.
“In exchange for helping the United States, the Islamic republic first wants international recognition as a legitimate entity.”
Therefore, the maverick Iranian leader was not engaging in his usual rhetoric when he said, “Mr. Obama has only one chance and that is Iran. This is not emotional talk but scientific. He has but one place to say that ‘I made a change and I turned over the world equation’ and that is Iran.” So, what exactly does Ahmadinejad want in return for helping the leader of his country’s biggest foe?
The answer lies in the following comment by Ahmadinejad: “Acknowledging Iran would benefit both sides and as far as Iran is concerned, we are not after any confrontation.” The Iranians are trying to bring closure to their efforts of the last eight years in which they have been trying to exploit the U.S. wars being fought in their neighborhood to achieve their geopolitical objectives. Ahmadinejad is laying out his terms.
In exchange for helping the United States, the Islamic republic first wants international recognition as a legitimate entity. Second, the global community needs to recognize the Iranian sphere of influence in the Islamic world. Third, and most importantly, while it is prepared to normalize ties with the United States, Iran wants to retain its independent foreign policy.
Put another way, Iran wants to be treated by the Obama administration along the lines of how U.S. President Richard Nixon’s administration dealt with China during the early 1970s. The demand for respect is a critical one. Iran is not interested in rapprochement with the United States along the lines of what Libya did in 2003 when it gave up its nuclear weapons arsenal in exchange for normalized relations with the United States and its Western allies.
Iran is not close to crossing the nuclear threshold yet, but it wants to retain that as a future option as per any deal. Iran has been emboldened by the fact that the United States is neither in a position to exercise the military option to prevent the Persian state from going nuclear, nor is it able to put together an effective sanctions regime that could affect a change in Tehran’s behavior. It is therefore using the regional dynamic as leverage to try and extract the maximum possible concessions on the nuclear issue.
On a further note, an arrangement based on the concept of “accept us for who we are” is critical to the interests of the Iranian regime for two reasons. First, it gets rid of the external threat of regime change. Second, it allows the Iranian regime to demonstrate on the domestic front that its aggressive foreign policy has paid off, which completely undermines its Green movement opponents.
It is too early to predict whether Iran can achieve its goals or not. It has moved to the final round of its efforts to use American weakness to its advantage, and at this stage it does hold a strong deck of cards.

Wednesday, April 28, 2010

Next...add the VAT.

Got this picture from the most excellent economics blog Carpe Diem (Seize the Day) by Mark Perry at the University of Michigan at Flint. The Wall Street Journal reported the other day a statistic from Dr. Perry. In 2008 the average citizen of West Virginia had an income $2000 greater than the average citizen of the European Union. And a European-style cradle-to-grave welfare society is going to give us what again? Right, lower living standards but at least we will all have an equal share of nothing.
The VAT is coming next as sure as night follows day. Dry your eyes, go back to work and pay up SUCKER. We'll collect the fruits of your labors and we'll decide how to spend it because we are smarter than you.

Tuesday, April 27, 2010

I got it! But now I need to get rid of it.

Please read this if you have a mustard seed of desire to understand what happened and why.

R.I.P. common sense. Tell me you don't agree with the following....

An Obituary printed in the London Times - Interesting and sadly rather true.

Today we mourn the passing of a beloved old friend, Common Sense, who has been with us for many years. No one knows for sure how old he was, since his birth records were long ago lost in bureaucratic red tape.

He will be remembered as having cultivated such valuable lessons as:

- Knowing when to come in out of the rain;
- Why the early bird gets the worm;
- Life isn't always fair;
- and maybe it was my fault.

Common Sense lived by simple, sound financial policies (don't spend more than you can earn) and reliable strategies (adults, not children, are in charge).

His health began to deteriorate rapidly when well-intentioned but overbearing regulations were set in place. Reports of a 6-year-old boy charged with sexual harassment for kissing a classmate; teens suspended from school for using mouthwash after lunch; and a teacher fired for reprimanding an unruly student, only worsened his condition.

Common Sense lost ground when parents attacked teachers for doing the job that they themselves had failed to do in disciplining their unruly children. It declined even further when schools were required to get parental consent to administer sun lotion or an aspirin to a student; but could not inform parents when a student became pregnant and wanted to have an abortion.

Common Sense lost the will to live as the churches became businesses; and criminals received better treatment than their victims. Common Sense took a beating when you couldn't defend yourself from a burglar in your own home and the burglar could sue you for assault.

Common Sense finally gave up the will to live, after a woman failed to realize that a steaming cup of coffee was hot. She spilled a little in her lap, and was promptly awarded a huge settlement. Common Sense was preceded in death, by his parents, Truth and Trust, by his wife, Discretion, by his daughter, Responsibility, and by his son, Reason.

He is survived by his 4 stepbrothers; I Know My Rights, I Want It Now, Someone Else Is To Blame, and I'm A Victim

Not many attended his funeral because so few realized he was gone. If you still remember him, pass this on. If not, join the majority and do nothing.

California state project. Your federal tax dollars at work.

Monday, April 26, 2010

Bailouts forever! An email from Peter Wallison.

"The debate over the Dodd bill has been presented by the White House as a fight between the Democrats protecting the taxpayers and Republicans protecting Wall Street.

However, Republican opposition to the Dodd bill, while amply justified by the fact that it institutionalizes too big to fail, can also be seen as an effort to protect the taxpayers from the huge costs they might have to pay if the resolution provisions in the bill are ever used.

The attached op-ed, which appeared in this morning's Wall Street Journal, shows that--contrary to President Obama's statements last week in New York--the bill currently before Congress could well result in substantial taxpayer costs. }

I thought you'd be interested.

Best regards, Peter"

GM pays back the loan? Stupid shell games....

Thanks to Dr. Rothman for sniffing this out....

Allan Meltzer to George Schultz...

I'm currently reading a book entitled "The Road Ahead for the Fed". George Schultz writes an introductory piece. He says that Allan Meltzer communicated to him in a phone conversation that in looking out into the future and past our current difficulties "It's a race between the inflation rate, the tax rate and (price) controls, and all three are going to win."

OHHHHHH Nooooooo! Say it ain't so Professor!!!!!

Saturday, April 24, 2010

ECU Alumni Golf Tournament 2010...See anyone you know?

This is a picture of the good folks who returned to this year's Advancement Council/Alumni Scholarship golf tournament. The purpose is to raise money for student scholarships and they answered the call. We had a bunch of fun! Next Year's tournament will be on Thursday April 21, 2011. We had 14 foursomes and many coming just for dinner. I am limited to 25 foursomes. I have 11 to go. Why not make this part of your annual event planning? I just want it to get bigger. If you are an alumnus of the ECU Economics Department, why not consider this your spring homecoming? Bring a foursome or just come for dinner. You always have a home here with us.

Friday, April 23, 2010


After 7 long and disappointing years of not winning my own golf tournament, I finally get to claim my rightful position atop the leader board. We went 20 under and only won by one shot. That is Class of 1991 ECU Econ grad and Wall of Fame member Francis Vaughn to my left and my nephew Ricky Parker to my right. We made no eagles on any of the par fives, but Ricky pitched in from 105 yards for eagle on #9 and then again from 25 yards on #18. But it took a hole-in-one to win it! Our playing partner and Class of 1992 ECU Econ grad Tee Davies made the ace on #17 to clinch it. To think it took a hole-in-one for me to finally break through is scary! But now I have the ring forever!

From our friend James Hamilton....

Tuesday, April 20, 2010

One year gone by since my loving, loyal and trusty canine son Spanky passed on.

My loving, loyal and trusty canine son Spanky has been gone now for one year. It still hurts like hell. In the 365 days since he went away I have probably thought of him 300 of those days...and had 300 lumps in my throat.

All I want out of life is that the Lord helps me to be the man my dog thinks I am.

My loyal and loving canine daughter Misiu is now 14 1/2 and has trouble walking from arthritis. I suppose more pain is right around the corner. It is part of the deal and I accept it. Watch this video. If you are a dog lover, it is going to make you weep.

An email from Peter Wallison...The Dodd bill institutionalizes bailouts.

Here is the email I was sent:
"The Dodd bill has reached the Senate floor without any serious consideration of how a program of resolving systemically significant financial institutions would actually be carried out. This would be an intricate task, requiring substantial knowledge of complex assets and even more complex liabilities.

From the beginning, the administration has designated the FDIC to perform this role, and the Dodd bill simply follows that lead. No one seems to have thought whether the FDIC actually has the skills or experience to do it. A bankruptcy court seems a better choice, especially in light of the smooth handling of the Lehman bankruptcy.

The attached op-ed, which appeared in the WSJ earlier this week, addresses this subject.

I thought you’d be interested. Peter"

Here is the content of the WSJ article

Here is another piece Peter Wallison wrote from the American Enterprise Institute regarding the designation of the fed as a "systemic regulator" which is a real bad idea:

But you really neeed to read this piece from today...short and sweet and to the point: The president blocked legislation that would have controlled Fannie and Freddie and now has the nerve to talk about "special interests"

Friday, April 16, 2010

More on wealth redistribution...

Here is something I signed on to 7 years ago in a different world than what we have today. Got me in pretty classy company.

Friedman on wealth redistribution.

Saturday, April 10, 2010


Dear Employees:

As the CEO of this organization, I have resigned myself to the fact that
Barrack Obama is our President and that our taxes and government fees will
increase in a BIG way.

To compensate for these increases, our prices would have to increase by
about 10%. But since we cannot increase our prices right now due to the
dismal state of the economy, we will have to lay off sixty of our employees

This has really been bothering me since I believe we are family here and I
didn't know how to choose who would have to go.

So, this is what I did. I walked through our parking lot and found sixty
'Obama' bumper stickers on our employees' cars and have decided these folks
will be the ones to let go. I can't think of a more fair way to approach
this problem. They voted for change...... I gave it to them.

I will see the rest of you at the annual company picnic..


The Boss.

Taliban Toast

Friday, April 9, 2010

A Day at the Fed.

Last Tuesday I had the pleasure of taking 6 of my best students for a day of economics at the Richmond Fed. The whole day was comprised of discussions and presentations of current economics. We were even addressed by Fed of Richmond President Jeff Lacker. The night before we enjoyed life with dinner at the five-star Morton's restaurant. Very pleasant. So nice to have fine young people like these as a part of my life and at East Carolina University.


Wednesday, April 7, 2010

Three things for sure...1. Economists are bad forecasters 2. Financial innovation will ALWAYS outpace regulation and 3. It is going to hapen again.

Greg Mankiw is always worth listening to. I like this idea of making financial firms buy contingent debt. I also like the idea of a "fire wall" for financial firms based on their charter. If you are inside the fire wall you are protected and boy are you going to pay for that insurance and should. If you are outside it, you are on your own. Then watch the market price their debt and leverage. But as sure as the sun rises tomorrow, financial markets are always going to be 3 steps ahead of regulators and another bubble is going to come along sooner or later. Then the mess we are in now will happen again....unless we take the right actions now. And we are not taking the right actions with what I have seen from proposed Senate legislation.

"Prediction is a difficult thing, especially when it has to do with the future."

Tuesday, April 6, 2010

Tax the rich and feed the poor...until there are no rich no more.

As the graph at left shows (tip o' the hat to James Hamilton for that), tax revenues have averaged about 19.2% of GDP through history no matter what the marginal tax rate was. If you think raising taxes on "the rich" is going to pay for much, history proves you wrong. Read this piece from the Wall Street Journal and you'll see the evidence. That is why I have said over and over...the VAT tax is coming as sure as day follows night. Dry your eyes, go back to work and PAY UP SUCKER!

BTW I robbed the above line from Alvin Lee and 10 Years After a great band from the 1970s. Here they are singing "I'd love to change the world." Yea, you and me both buddy.

Saturday, April 3, 2010

Friday, April 2, 2010

Simple and straight forward explanation of currency manipulation.

Calling All ECU ECONOMICS ALUMNI! We are now up and running on Facebook!

The above link is the new Facebook page for our Department Alumni and friends. Please become a fan of this page and follow us as the days and years continue on....Dr. Grodner and I will keep things new and up to date.

Please note this year's annual Alumni/Advancement Council Scholarship golf tournament is April 22nd. If you can't play in it, please consider becoming a donor to the department and help us "give back". I include a picture of the Alumni that came last year. We raised over $16,000!

Thursday, April 1, 2010

From today's Wall Street Journal...

But how long can troubled borrowers even pretend? The latest Mortgage Metrics report from the Comptroller of the Currency shows that most of the loans modified in the first quarter of 2009 had gone bad again within nine months—52% were more than 60 days delinquent.

I can't live the lie any's time you know.

This is a sign in the door of a bagel shop I frequently go to. Things have to be on the upswing!