Entries for February 2009

By Michael Barone, Thomas Jefferson Street blog

In the 1830s Alexis de Tocqueville identified as one of this country's great strengths Americans' propensity to form voluntary associations. It remains one of America's great strengths today, one which distinguishes us from every other nation. But it is under attack from the Obama administration. As the Wall Street Journal reports:

By Michael Barone, Thomas Jefferson Street blog

Another interesting article from Wired presents a proposal I have been trying to come up with. The problem with mortgage-based securities is that no one can value them because no one knows what's in them. My idea has been that in order to have transparency, we should regulate the markets the way the Chicago Board of Trade started regulating the grain futures market years ago—separating grain into four (or some similarly low number) grades of grain and declaring all grain within that category fungible. In Wired Daniel Roth has a far better idea:

By Michael Barone, Thomas Jefferson Street blog

Several economic blogs have pointed me to this excellent article by Felix Salmon in Wired on the Gaussian copula devised by mathematician David X. Li in 2000. This was a mathematical formula to quantify risk that "was adopted by everybody from bond investors and Wall Street banks to ratings agencies and regulators. And it became so deeply entrenched—and was making people so much money—that warnings about its limitations were largely ignored." It turns out that the formula underestimated the risk of many homeowners defaulting on mortgages at the same time. A method which was useful for insurance actuaries—for estimating the likelihood that a person whose spouse had died would die earlier than the actuarial tables would lead one to expect—turned out to be unreliable.

By Michael Barone, Thomas Jefferson Street blog

Mickey Kaus endorses writer-and-labor-lawyer Tom Geoghegan for Congress. He's running in the Illinois 5th district special election to succeed Rahm Emanuel. I concur!

By Michael Barone, Thomas Jefferson Street blog

As a footnote to my column on the Census, here is Peter Baker's good piece on why the Census is important to politicians.

By Michael Barone, Thomas Jefferson Street blog

Not surprisingly Michigan voters tend to favor government loans to General Motors and Chrysler. But only by a 52-36 percent margin; I would have thought it would be higher. On this, Michigan is out of step with the nation, which is 44-33 percent against the loans.

By Michael Barone, Thomas Jefferson Street blog

A pretty definitive take on the decline of California from Joel Kotkin. The chief culprits today: "the gentry liberals and the public sector." On the former: