FinReg: a history

My latest article for Research magazine: "The Rise of the Regulators." Excerpt:

The 1913 Federal Reserve Act, creating a central bank and lender of last resort, marked a major step-up in federal involvement in the financial sector (expanding the previous role initiated by Civil War legislation that had allowed nationally chartered banks and set up the Office of the Comptroller of Currency). But Washington’s focus still was on stabilizing banks and the dollar, not on overseeing stocks and bonds.

The securities business thus remained lightly regulated overall through the Roaring Twenties. Industry touted its ability to self-regulate, as it had done since the 1790s by fixing brokers’ commissions. In 1922, the New York Stock Exchange imposed capital requirements on its member firms. Amid prosperity and rising stock prices, there was little public or political pressure for a tighter regulatory regime. Soon there would be.

Whole thing here.

In memoriam

Farewell to JR Minkel, friend, colleague and science writer whose work I long admired.

Financial book watch

Current reading: Crash of the Titans: Greed, Hubris, the Fall of Merrill Lynch, and the Near-Collapse of Bank of America, by Greg Farrell. Quite interesting. I'll likely have some discussion of this book down the road.

Recent reading: Exorbitant Privilege: The Rise and Fall of the Dollar and the Future of the International Monetary System, by Barry Eichengreen, whose work I've touched on here and here. This book is a well-reasoned and well-informed look at a subject that often generates poorly reasoned and poorly informed commentary. One worthwhile review is at The Economist.

SOTU note

I hope to weigh in on the State of the Union address at FrumForum this evening.

UPDATE: "Frumicide"! Thanks, Rush. FrumForum couldn't buy that kind of publicity. Also, Live Chat will be here.

Omega Theory

I'm pleased to note that Mark Alpert, friend and colleague from past work at Scientific American, and author of Final Theory, has written a second science-oriented novel: The Omega Theory.

Bob Barr in Haiti

During the 2008 campaign, I had the pleasure of debating the dubious merits of Bob Barr's quixotic Libertarian candidacy in Barr's presence, as part of the now-defunct Debates at Lolita Bar. I said some fairly critical things about Barr, including a wisecrack about shaving cream that may have been a step beyond the proper decorum in speaking to and about a former congressman. I recall suggesting that his candidacy would be a springboard into future success in talk radio and the speaking circuit. What I never imagined is that Barr would resurface as a representative for the infamous Haitian dictator "Baby Doc" Duvalier upon the latter's return to Haiti. How that squares with any kind of libertarianism I don't presume to guess. (Via LGF.)

A moment for contemplation

Posting can be expected to continue to be light (barring any sudden moves by my co-bloggers) as I catch up on various personal and professional matters. Thanks for visiting. This photo was taken in the excellent Patan Museum in Nepal in 2009.

A belated word on rhetoric

I watched the news about the Arizona shootings this weekend with horror, which gradually shaded into disgust upon seeing the political point-scoring back-and-forth that followed. Being too busy with personal responsibilities, I didn't have the luxury of writing any quick-response piece, which also gave me some additional time to think about what I might write. I note as background that I wrote a piece in May titled "Conservatives Aren't 'At War' With the Left," which argued against martial or violent-sounding rhetoric partly on the following basis:

It’s inflammatory. If you’re at war, the way to win is by killing the enemy. If you’re in a nonviolent political contest or conflict, the way to win is by out-debating, out-voting, out-organizing and outsmarting your opponent. It’s always possible some nut will take the “we’re at war” business too seriously and then the purveyors of that rhetoric will disavow that they had anything violent in mind. But it’s better not to blur the distinction in the first place.

Watching the Arizona political aftermath, I'm struck by (1) how eager some on the left were to place blame for this shooting onto Sarah Palin or other conservative politicians, regardless of the absence of any evidence of any connection between their rhetoric and the shooter's actions; and (2) how stalwart some conservatives, such as my friend John Guardiano, remained in asserting that the right's rhetoric has been appropriately hard-hitting, and that the only thing to worry about here is how disapproval of same can erode free speech.

And of course, a few months ago, when a hostage-taker turned out to be a fan of Al Gore-style environmentalism, the political sides arrayed themselves differently.

Here is my suggestion: Don't judge a piece of political rhetoric, or any form of speech actually, by how an insane person might misconstrue it. Judge it by whether it's reasonable and valuable in and of itself. To my mind, Sharron Angle's "Second Amendment remedy" comment was despicable precisely because you don't have to be insane to see it as an incitement to violence. Palin's target map and "reload" tweet I put in a different category as they were clearly metaphorical*; they are not incitements to violence but they do reflect her angry, resentful, base-pandering style of leadership -- which as David Frum points out she had (and blew) a tremendous opportunity to rise above following the shooting.
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* - Unlike, incidentally, the "we're at war"-type statements by various conservatives that I criticized last May.

UPDATE: John McQuaid writes "On Political Madness," and links to the above here.

UPDATE: Interested in reading McQuaid's piece in Swedish? It's here.

Denise Silber, chevalier

Heartfelt and proud congratulations to my sister, Denise Silber, who is to be awarded the Legion of Honor -- France's most prestigious civil decoration! This is for her professional work in bringing the Internet and social media to bear on improving health care in France and internationally, under such rubrics as eHealth and Health 2.0. La Légion d'honneur, in which Denise will take on the grade of chevalier, is a distinction not often bestowed on non-French citizens (Denise is a U.S. citizen living in Paris). The announcement is here.

Unusual 19th century women dept.

UPDATE: My Jan. 3 interview with Gabe Wisdom is available as a podcast here.

UPDATE: I'll be on the Gabe Wisdom Show to discuss this article on Mon., Jan. 3 at 7pm ET.

My article in the January issue of Research magazine is now online: "Wall Street's First Woman," about Victoria Woodhull, stockbroker, suffragist, paranormalist and presidential candidate. Excerpt:

Victoria Claflin Woodhull (1838-1927) led a weird, tumultuous life, marked by wild ups and downs, scandal and acclaim and the distinction of being, among other firsts, the first woman to run for president of the United States and co-founder (with her sister Tennessee Claflin) of the first female-run brokerage firm.

The latter role is what first brought her to wide public attention. When Woodhull, Claflin & Co. opened its doors in 1870, the press took excited notice, providing the sisters with such labels as “Queens of Finance” and “Bewitching Brokers.” A New York Sun headline put Wall Street bulls and bears on notice that there were now “Petticoats Among the Bovine and Ursine Animals.”

The firm had financial backing from shipping and railroad tycoon Cornelius Vanderbilt, one of the wealthiest men in America, who had taken to receiving investment tips from Woodhull while she was in a seeming trance communing with the spirit world.

Victoria had dabbled in such mysterious matters since she was a girl in Ohio. Her father, Buck Claflin, was a huckster who promoted his children’s purported paranormal powers. Victoria’s specialty was channeling the ancient Greek statesman Demosthenes.

Whole thing here.

Libertarian triumphalism

Over at FrumForum, I ask: "Is the Libertarian Revolution Finally Here?" Excerpt:

Ron Paul gets considerable play in the New York article as an exemplar of libertarianism (and Reason has largely embraced him as such too, despite some past qualms). It is highly debatable whether Paul’s political prominence signifies a “libertarian moment” or rather just a tragedy whereby libertarianism becomes conflated with a particular strain of illiberal, conspiracy-minded twaddle. It is also quite questionable whether Paul’s particular policy preferences (such as, notably, ending the Fed) will have any substantial impact on actual policy (as the New York article acknowledges).

Whole thing here. UPDATE: Title changed to "Libertarian Revolution? Not Exactly."

UPDATE 12/28: The Atlantic has a roundup regarding the Beam piece, with a summary of my article but my name misspelled. Ah, fame, so fleeting....

UPDATE 1/2: If interested in any of the above, don't miss David Frum's piece "Were the Founding Fathers Libertarian?"

Toward 2011

It's a busy moment for me, what with weather, visitors (and cancelled flights), professional obligations and more. Posting here can be expected to be light. However, I believe FrumForum will run a symposium tomorrow, including my contribution, on what Congress's priority in 2011 should be.

Black Swan

by Dan Summer

Black Swan is a new film by Darren Aronofsky, who directed the Wrestler, Pi, Fountainhead, and Requiem for a Dream. It incorporates ideas of swan lake with a psychedelic twist. Natalie Portman (who does a better job in this than as Queen Amadala) is the lead as a ballet dancer in a prestigious dance company. The creative director is a narcissistic womanizer, who tries to push her to the limits in playing both the white and black swan.

Like other films of Aronofsky's, its a study of the human condition, especially the human psyche when facing pressure to be the best. It is a film that keeps you interested the whole time. What is real, what is made up? Anyway I highly recommend it, especially if you like some mild erotica and want to be aroused. Just don't bring your mother.

http://www.imdb.com/title/tt0947798/

Geography books redux

Various FrumForum contributors and readers, myself included, discuss "Our Favorite Books of 2010." My section, with links added:

For the reader interested in how the world geopolitical map is changing, I recommend two recent books.

Monsoon: The Indian Ocean and the Future of American Power, by Robert D. Kaplan (Random House) argues for the growing economic, military and political centrality of the Indian Ocean and surrounding lands, as China and India assert their interests in what for centuries was a Western-dominated region.

The World in 2050: Four Forces Shaping Civilization's Northern Future, by Laurence C. Smith (Dutton) argues that the Arctic and its environs will be of growing importance, because of climate change, demographics, globalization and a scramble for resources.

There is less tension between these two theses than it might appear. I saw Kaplan on Fareed Zakaria’s show say that China will be a greater power than Russia because the latter is stuck up there in the Arctic (or words to that effect). But Smith’s thinking is similar, in that he suggests that an ascendant China someday might buy – or even forcibly take – thinly populated sections of Russia’s East and North.

Together, the books make a solid case that the 21st-century strategist shouldn’t be too much of a Europhile or Pacific Rim aficionado, since big things are happening elsewhere in the world.

Whole thing here.

Three years of blogging

Tomorrow marks the third anniversary of QuickSilber, a blog that's covered topics ranging from pure-strain gold to Clinton Road, from the Royal Bengal tiger to Sarah Palin, from Newt Gingrich to Who Really Wrote the Bible, and sundry other topics often having something to do with politics, economics, history, science or some combo thereof. It's been fun and I intend to continue posting here, while also blogging for FrumForum, writing regular articles for Research magazine, and contributing to various other publications (some listed at the right). I enjoy the spontaneity and timeliness of blogging, and even as I've branched out onto Twitter, I continue to find that non-micro-blogging has a role. Thanks to my co-bloggers Gil Weinreich, Dan McCleary, Dan Summer, Mitch Johnson and Mike Battaglia for their explicit and implicit contributions, and thanks for reading.

Ron Paul's monetary oddities

Ron Paul, incoming chairman of the House subcommittee that oversees U.S. monetary policy, holds monetary views that don't make any sense. Here's an excerpt of an interview by Wall Street Journal reporter Sudeep Reddy:

The panel you’ll be leading hasn’t gotten much attention in the past. What can a subcommittee chairman really do?
I think it’s more calling attention and getting information and acting as oversight. There will be legislation that we can talk about. We can talk about auditing the Fed. Even in the other committees, everything is a reflection of popular demand. There’s getting to be a bigger demand now for more information. I’d certainly like to have competition with the Fed to legalize competing currencies. That’s not going to happen, but we sure can talk about it. Most people recognize that the dollar reserve standard, there’s nothing permanent about it. Even the international bankers are talking about a new currency or using gold even. The big question is should we move further away from national sovereignty and our constitution and give it to an international body and try some crazy Bretton Woods standard again, which is doomed to fail. Or should we look to our traditions and have sound money.

Me: The gold standard historically depended strongly on international cooperation, as is discussed in vast detail in Barry Eichengreen's book Golden Fetters. Central banks engaged in frequent, coordinated actions to stabilize the price of gold vis-a-vis their respective currencies and maintain a set of fixed exchange rates. It was a souped-up version of the later Bretton Woods system, which Paul in this same paragraph decries. What exactly is his problem with Bretton Woods -- that it required too much international cooperation? The classical gold standard required more cooperation. He's worried about national sovereignty, so therefore he wants to make the dollar readily convertible into gold? Does it occur to him that maybe China would say "OK, convert all our vast dollar holdings into gold"? No, it doesn't, apparently.

As for "competing currencies," let's leave aside the huge unanswered question of whether having to change currencies or calculate rates multiple times a day could make for an efficient monetary system -- let's focus instead on what it has to do with national sovereignty, which Paul claims to want to protect. How exactly would having various currencies issued by various entities -- say, the Citibank Citidollar, the Walmart Wally, the Ken Silber Silver Peso -- enhance the sovereignty of the United States? Would the federal government accept tax payments in all these currencies? Would China, again, not have enhanced clout in the international monetary system now that there is no substantial U.S. monetary authority to counterbalance it? Of course, if you want an anarchocapitalist society, as some of Paul's supporters do, then you might not care about national sovereignty, but Paul claims it's sovereignty he's defending. This is the gold standard of self-contradiction.

Republican scientists re-redux

Daniel Sarewitz at Slate recently caused a kerfluffle with his "Lab Politics" article bemoaning the dearth of Republican scientists. See responses from Mother Jones, Salon, and Discover. For now, I'll just point readers back to my own article at FrumForum in response to the same poll Sarewitz discusses. Also see my posts here and here. I'm sure it's a subject I'll be looking at again in due course.

UPDATE: Also see this post at Commentary,which suggests the AAAS poll sample was skewed. There may well be some truth to that, but it would have to have been very skewed -- implausibly so -- to turn any sizable number of Republican scientists into 6 percent.

Radio note

I'll be on the Gabe Wisdom Show on Monday night at 7:30 pm Eastern to talk about financial history. For some previous radio appearances, scroll through the list here.

UPDATE: Here's the podcast.

Mildred Fish Harnack

By Mitch Johnson

The University of Wisconsin Hillel center just closed a moving exhibit on Mildred Harnack, the only American woman executed by the Nazis. I was lucky enough to see it on a recent visit, but if you missed it, there may be a second incarnation: a documentary is being made by Wisconsin Public Television for a possible release in the fall of 2011.

Mildred Fish was born in Milwaukee, WI in 1902, completed her Bachlor’s and Master’s degrees in English and Literature at the UW Madison in 1926, and became engaged to the German Economist Arvid Harnack at Picnic Point, also in 1926.

Mildred and Arvid moved to Berlin in the 1930s, where they eventually became part of an underground resistance network that the Gestapo named the Red Orchestra. Arvid passed sensitive information to the Soviet, British, and American embassies, and Mildred is believed to have done the same while a tutor for the American ambassador’s son.

In 1942, the Harnacks were arrested and subjected to secret trials with no legal representation. Arvid was hanged in December, and though Mildred’s initial sentence was for 6-years hard labor, archival records indicate that Hitler may have personally intervened in the case and ordered a retrail. She was executed by guillotine in February 1943. She spent her last day translating Goethe. Her last words were, “.. and I have loved Germany so much.”

I’m happy to know that people in Wisconsin are giving one of their heroines some much deserved attention.

There are some terrific photographs and documents at: http://www.wfu.edu/~ecarlson/mildred/index.html. There’s also a biography here: http://www.amazon.com/Resisting-Hitler-Mildred-Harnack-Orchestra/dp/0195152409.

(Any family members looking for last-minute gift ideas for me, take note!)

Tax deal analysis

What do I think of the tax deal? Better than just letting the tax cuts expire in an ailing economy. But the long-run U.S. economic future requires a more through revamp of the tax system than anything in prospect now. Neither party has any stomach for a VAT or carbon tax currently, even as part of a package that would reduce or eliminate the income tax. Nor do the parties have much interest in needed entitlement reforms or discretionary spending cuts. Meanwhile, many Republicans want to radically reform the monetary system, an area where the measures contemplated would be counterproductive in the extreme. So the current deal is better than nothing and may have the benefit of keeping politicians distracted from matters where they could do real harm.