Liberte, Suburbie, Fraternite!

by John Holbo on January 23, 2008

I’m reading David Frum, Comeback Conservatism [amazon]. So far, so mushy. But it does, at the very least, contain the third silliest argument I’ve encountered in the last 6 hours. (The top two contenders arrived, courtesy of Jonah Goldberg, in his bloggingheads exchange with Will Wilkinson.)

Here is Frum, protesting the notion that John Edwards is a friend of the poor, or in any sense an economic egalitarian:

Voters sense this truth. It’s an observable fact that those voters who care most deeply about equality – deeply enough to organize their lives to live in egalitarian communities – overwhelmingly vote Republican.

Take a look at a map of the state of Missouri. A recent study conducted by the state identified a dozen of the state’s 114 counties as “equality centers.” These equality centers were located on the outer fringes of St. Louis, Kansas City, Columbia, and Springfield. Every single one of these highly egalitarian areas of the state voted overwhelmingly Republican.

Meanwhile, the most unequal parts of Missouri, the cities and especially the city of St. Louis, voted heavily Democratic. Where you find many different lifestyles and races; where you find singles, immigrants, and gays; where you find high-rise buildings, country estates, and really great take-out – there you find inequality. After all, what is inequality but another form of “diversity”? And what is “equality” but another word for homogeneity? Communities with lots of married families, lots of single-family homes, and low proportions of nonwhite minorities and single people – communities that Democrats and liberals would inwardly disparage as “white bread” – are communities in which people tend to earn similar amounts of money. (p. 37)

Cracks in the foundations

by John Quiggin on January 23, 2008

The decision of the US Federal Reserve to cut interest rates by 0.75 per cent is as clear a sign of panic on the part of the monetary authorities as we’ve seen since the 1987 stock market crash. It’s not entirely coincidental that it followed a dreadful week on Wall Street, and a couple of awful days on world stock markets while the US was closed for the long weekend.

Still, stock markets have fluctuated quite a bit in the last 20 years without producing this kind of reaction. The really alarming events have been happening in bond markets and, in retrospect, the most alarming happened just over a month ago.*

That’s when Standard and Poors cut the credit rating of ACA Financial Guaranty Corp from A (strong investment grade) to CCC (just about the worst kind of junk) in one move. This event showed the weakness of two of the most important defences against the kind of credit derivative meltdown that market bears have been worrying about for years.

[click to continue…]