The John Batchelor Show

Tuesday 20 May 2014

Air Date: 
May 20, 2014

Photo, above: "The Mission Control Center of the Russian Federal Space Agency (RussianЦентр управления полётами), also known by its acronym ЦУП ("TsUP") is located in Korolyov, near the RKK Energia plant."

JOHN BATCHELOR SHOW

Co-host: Larry Kudlow, senior CNBC consultant; and Cumulus Media radio

Hour One

Tuesday  20 May 2014 / Hour 1, Block A:  James Pethokoukis, AEI, in re:  On Earth 2, Washington bailed out Main Street, not Wall Street In my new The Week column, I take issue with what Tim Geithner recently told The New York Times. The former Obama Treasury secretary said Americans are “deeply confused and mistaken” if they think there was “a way to somehow protect people … more >

What if the Fed had bailed out Main Street by cutting taxes and protecting the citizens? We would have had a stronger recovery, and begun to end the expectation of huge banks that the govt will always bail them out.  The Geithner way is to bail bail bail. We have a similar crises about every decade. LK: The risk/reward ratio wasn't good at that time – the risk of not doing it [bailing] was greater than the possible reward fromm [bailing out banks].   JP: We had a collapsing economy that led to a crisis. I want to create a banking system that a stress-proof: one thing is to hold much higher capital level for banks.  LK: John Tayl0r points out that the interbank market stopped, so let Lehman Bros go down, bail out AIG and Fannie and Freddie – no one in the financial world could figure out the govt's next move.  In fact, they had no policy, they were doing it on the fly.  JP: Even as the economy was sinking from Sept-Dec 2008, the market was actually expecting a tightening of policy, which occurred de facto. Everything that could go wrong, did.  We didn’t have to get to Lehman. 

EconomicsPethokoukisUncategorized   The US budget deficit continues to shrink rapidly One of the most underappreciated econ stories right now is the fast-falling US budget deficit — thanks to higher taxes — which was over $1 trillion from 2009 through 2012. In February, the CBO was looking for a 2014 deficit …  more >

EconomicsPethokoukisU.S. Economy   Marc Andreessen on how regulation stifles innovation:

The venture capitalist Marc Andreessen [on why Silicon Valley is so tough to replicate] said new valleys will eventually emerge. But they won’t be Silicon Valley copycats. Over the past couple of years, venture firms have invested in start-ups in Los Angeles, New York, Chicago and all over China. Los Angeles, for example, is home to Snapchat, Tinder, Whisper, Oculus VR and Beats, some of the big tech stories of the year. Mr. Andreessen said another hot place is Atlanta, the home of Georgia Tech.

But he offers a caveat. “My personal view is that Silicon Valley will continue to take a disproportionate share of the No. 1 positions in great new markets, and I think that’s just a reflection that the fact that the Valley works as well as it does,” Mr. Andreessen said.

There is a caveat to his caveat.  In Mr. Andreessen’s view, there shouldn’t be 50 Silicon Valleys. Instead, there should be 50 different kinds of Silicon Valley. For example, there could be Biotech Valley, a Stem Cell Valley, a 3-D Printing Valley or a Drone Valley. As he noted, there are huge regulatory hurdles in many of these fields. If a city wanted to spur innovation around drones, for instance, it might have to remove any local legal barriers to flying unnamed aircraft.

So what kind of valley would Marc Andreessen build? He's a big believer in digital currencies like Bitcoin, as well as in virtual reality. He says enterprises like Bitcoin will change the world on the scale that web browsers did. And before long, virtual reality will be, well, reality.

The bit about regulatory barriers to startups and innovation really jumps out at me. It's a topic I find myself returning to again and again. Too much focus on taxes by folks on the right, too little on regulation. …  more >

Tuesday  20 May 2014 / Hour 1, Block B:  James Pethokoukis, AEI, in re: Can GOP win in 2016 without immigration reform?  Yes, but it can’t stay a small, rump party with lots of white voters.  Agree – it cannot be exclusionary.   . . .  National security. We need more visas, more population growth, brainiacs, to keep the students who come here to university and then are forced by Fed policies to leave!  Note that the fastest-growing immigrant group is Asians – who're becoming ever more Democratic. When Romney started speaking of "self-deportation" and catering to the far-right restrictionists, that was his death knell.  We’ve had 12 million undocumented immigrants here for decades – bring them out of he shadows, make them pay taxes, learn English, learn American history.  Even the tea party says that r=current immigrants should get some sort of legal status – not citizenship. Border security does play an important role.   JP: It’s in the interest of Dems not to let GOP [straighten out] its immigration turmoil.  GOP has gone a little nuts – wants no immigrant, low- or high-skilled.  LK: I want to have this debate asap.

Who's pushing easier mortgage credit? WSJ: " ... lawmakers, affordable-housing groups and the real-estate industry" 

Worst. Idea. Ever.: Obama to loosen lending standards to boost home ownership   Obama to loosen lending standards to boost home ownership. What could go wrong?   After a near-depression and worst-ever financial crisis that cost the US economy as much as $14 trillion, one might think Washington would be careful to avoid repeating the same policy mistakes. One might think, for instance, Washington would think twice and then thrice before loosening mortgage lending standards to boost home ownership, particularly among low-income borrowers. Because, you know, loosened mortgage standards seem to have played some role in helping set the stage for the catastrophic mortgage meltdown.

Recall three conclusions from the National Commission on the Causes of the Financial and Economic Crisis in the United States:  1.) From the majority report: “We conclude collapsing mortgage-lending standards and the mortgage securitization pipeline lit and spread the flame of contagion and crisis.”  2.) From one of two dissenting reports: “The causes of the mortgage bubble and its relationship to the housing bubble are also still poorly understood. Important factors include weak disclosure standards and underwriting rules for bank and nonbank mortgage lenders alike, the way in which mortgage brokers were compensated, borrowers who bought too much house and didn’t understand or ignored the terms of their mortgages, and elected officials who over years piled on layer upon layer of government housing subsidies.”  3.) From the other dissenting report by AEI’s Peter Wallison: “… I believe that the sine qua non of the financial crisis was U.S. government housing policy … which sought to increase home ownership in the United States through an intensive effort to reduce mortgage underwriting standards.”

So surely government regulators would avoid taking any action to reduce lending standards again, right? Better safe than . . .

Tuesday  20 May 2014 / Hour 1, Block C:  Bill Whalen, Hoover, in re: Neel Kashkari, recommended by Larry Kudlow, running in the Republican primary against Tim Donnelley on 3 June.  Donnelly has effectively framed this as a battle of country GOP vs country club GOP.  It’s about style, and also immigration.  "Donnelly is a bigot."   in the little dusty corner of restrictionists- -a losing position in California. Neil is a one-big-tent kind of guy.  On economy, Donnelly is a root canal guy: cut spending.  Neil talks a lot about education.  It's rare for two candidates to have such little name recognition or money in the kitty. at this stage of the primary. Big lack of interest.  Last poll we saw was a field poll: 14%  for Donnelly  and 2% for Neil Kashgari.  GOP urgently needs a new face.   LK: I was in OC recently, saw young, Latina women doing volunteer work for the Young republicans.  Something is changing .  Bill: Donnelly thrives on saying outrageous things.  Nil would be hard pressed to get 40% of the vote; Donnelly could end up at 30%, if . . .  Collateral damage down the ticket. . . . Note that the San Antonio mayor Julian Castro, now of HUD, may become Hillary Clinton's running mate for VP.  He and his twin brother, Joaquin, went to Stanford Law, have illustrious careers, and are in their thirties. 

Tuesday  20 May 2014 / Hour 1, Block D:  Lanhee J. Chen, Hoover, in re: The unfortunate thing abt Medicaid is that it reinforces poverty:  childless adults not working become eligible for Medicaid.  If you want to get off Medicaid (or food stamps or welfare) you lose assistance, so the incentive is to stay on the poverty plan.  This perpetuates the cycle of poverty. People need a way to get upwardly mobile – it may be smarter to get off Medicaid. Gov Mike Pence (Indiana) has a health savings plan, will fund up to 130% of poverty line, and client must make a co-pay contribution and there's a work component.  This embodies help, work, and consumer choice. I’d give many people $500 to start a health saving acct, and another $500 to start a retirement account.  To use your health-savings acct to buy an over-the-counter drug, need a scrip – what? This is nuts.  Dems want the govt to run the entire health-care sector. 

Hour Two

Tuesday  20 May 2014 / Hour 2, Block A: Stephen F. Cohen, NYU & Princeton professor Emeritus ;  author, Soviet Fates and Lost Alternatives: From Stalinism to the New Cold War, & The Victims Return: Survivors of the Gulag after Stalin; in re: The Chocolate King of Ukraine is the leading candidate for the presidency of Ukraine/Kiev.  First fact to establish is: will the election happen? Germans say they’ll have a thousand observers OECD will contribute 2784 from 19 countries.  Will more monitors show up than voters? The election in Kiev and its primary sponsor, Washington, . . . Moscow is not incorrect to say that these elections are not legitimate. Begs the question, what was the hurry? To get legitimacy.    In February the EU brokered an arrangement with Yanukovich for elections in December.  In Eastern Ukraine the Party of the Regions and the Ukrainian Communist Party have had their candidates assaulted in the streets; definitely now afraid.  Looks like a result of partition of the country. To win, need 50% plus one vote; if the winner (first or second round) isn’t recognized by the half of the population in the East, then we’re worse off than before.  Right now, the Kiev govt is working on a constitution where most power reposes in legislature, not president, unlike the old constitution. 

Tuesday  20 May 2014 / Hour 2, Block B: Stephen F. Cohen (2 of 4), in re:  William Browder went to Russia in the Nineties, made a lot of money – lay down with dogs, got up with fleas: was fleeced. Furious, he hired a lawyer to protect him; lawyer was thrown in prison in Russia and died there.  Thus the Magnitsky Act: " bipartisan bill passed by the U.S. Congress and President Obama in November–December 2012, intending to punish Russian officials responsible for the death of Russian lawyer Magnitsky in a Moscow prison in 2009"; no recourse or due process, charges can be brought anonymously. Last week Dana Rohrabacher (R-CA) challenged State on Kiev policy – brave, and I respect him for that.  Twelve names on new additions to list of sanctioned Russians now forbidden to enter the US.   No debate in either party about the new Cold War. Pres Obama has all but vanished; when he says anything, it bears no relation to the situation on the ground in Ukraine. Similarly, Secy of State Kerry. The Russians are begging for diplomacy while the Americans are encouraging war.

Tuesday  20 May 2014 / Hour 2, Block C: Stephen F. Cohen (3 of 4), in re: Vladimir Putin not hanging and waiting for he Ukrainian election – he's in China. Agreement on Cooperation, a step to undercut the strength of the US dollar as global reserve currency, Also, Gazprom to CNOOC:  the two powers of the supercontinent Eurasia – Russia as the leader, China as wingman.  I've been arguing since the Nineties tat if he US keeps squeezing Russia as weak, it'll turn to China. Everyone said no, Russians are too racist and worried about China n Siberia – but in fact Berlin and Beijing are Russia's most important partners, and Berlin is fading a bit.  Putin's welcome in China was enormous; thirty-year relationship.  BRICs may join them. Russia has $300 billion in US Treasurys, which Russia could dump.  Could do a lot of things bad for hr US economy.  Russia has oil and weapons that China wants a lot; Russia has held back on some sophisticated systems but may no longer; and China has a huge market to replace Europe's. Looks as though Russia holds the cards.  Moscow sells 80% of its energy to the West; smart of Russia to seek  another outlet.  Forty countries are meeting in Shanghai – incl Iran, Pakistan, Kazakhstan and Cambodia.  Where Russian-Chinese relations might go, Washington needs to consider – may want to create the equivalent of NATO, possibly including India.  Think of world population: "isolate Russia" – what are they talking about?? There are Russian elites who want to maintain good relations with both US and China – but if the US forces Russia away . . .   Go to your globe, look at the massive supercontinent of Eurasia: none of it needs the US.  If you were in Paris or Berlin, which side would you ally with?

Tuesday  20 May 2014 / Hour 2, Block D: Stephen F. Cohen (4 of 4), in re: Andriy Parubiy said to  have been in charge of Maidan; runs groups of black-hooded thugs; wants to continue turmoil.  Something resembling a neo –fascist movement – let’s say ultranationalist – has been resent in Western Ukraine for many years; was only a small part of Maidan demos.  However, it became the violent part of the demos, where young toughs wore black masks and threw Molotov cocktails. Svoboda Party was called by the EU "racist, ant-Semitic and incompatible with European values"   Pravy Sektor” (Right Sector) now holds five ministries, including the  "power ministries" of  national security, internal affairs; this man is dispatching troops to put down the insurgents in the East; he recruited the ulatranationalists in Western Ukraine, created a "National Guard."  Two very bad aspects:  Kievan govt has continued to send more and more troops eastward; also, in Odessa, 40 people were burned in a building, and people died in at least three other cities.  Terrible: the US has not protested these atrocities.   Samantha Power and others said, "Kiev has a right to restore law and order."  Some of these deeds are  rising [sinking] to the level of war crimes. I’m ashamed that my govt doesn’t say, "We'll investigate; we condemn."  Very, very bad.   Coming soon: the seventieth anniversary of the Normandy landings; Putin will probably go only if the history is clarified: Russia had already largely defeated the Nazis, and Normandy was a valuable cleaning-up campaign. 

Hour Three

Tuesday  20 May 2014 / Hour 3, Block A:   Salena Zito, Pittsburgh Tribune-Review & Pirates fan, in re: Media Missing the New Populist Wave By portraying the GOP as an extremist party with no room for anyone who doesn't agree, much of the media miss what is happening in the American electorate — the building of a new populist wave.

For all intents and purposes, the tea party movement is gone, following the pattern of most populist political movements in our history. Such movements generally peak after two election cycles, or they are taken over by the most extreme elements of their membership (or by unscrupulous political fundraisers); those who initially supported the movements often settle back into their party of origin, or they become independent voters who feel free to pick a person, not a party.

Tuesday  20 May 2014 / Hour 3, Block B:  Robert Zimmerman, behindtheblack.com, in re: The competition heats up: Russia signs a preliminary space exploration agreement with China.

Meeting with his Chinese counterpart, Deputy Prime Minister Wang Yang, in Beijing on Monday, [Russian Deputy Prime Minister Dmitri] Rogozin announced on Twitter that he had signed “a protocol on establishing a control group for the implementation of eight strategic projects.” In a later Facebook post, he said “cooperation in space and in the market for space navigation” were among the projects. Rogozin and Wang agreed to hold a meeting between the heads of their respective agencies “in the near future,” so that Beijing and Moscow could sow the seeds of a potential space partnership.

Federal Space Agency chief Oleg Ostapanko wants to allow “Chinese colleagues participate in some of the most interesting projects that can replace the ISS,” Rogozin said, adding that they would also discuss “projects such as cooperation in the field of rocket engine development,” and cooperation in the growing market of space applications services — which primarily applies to the development of the Chinese Beidou satellite navigation system and Russia’s Glonass navigation system, both rivals to the U.S.’ GPS.

The article does not give much information about this agreement, but does spend a lot of time discounting it, saying that it really is only a bluff to keep the U.S. from imposing more sanctions against Russia’s profitable commercial space efforts.

Sources in Russia say that it was human error in the rocket assembly that caused last week’s Proton launch failure.

The next Falcon 9 commercial launch, scrubbed from early May, has now been rescheduled to June 11.  This new date is a significant slip in the schedule, as they originally announced only a two week delay, and this adds on another two weeks. The original announced reason for the scrub was umbilical connection issues, but a commenter here at Behind The Black says it might have been something more serious, “a helium pressurization bottle burst in the stage.”

The competition heats up: Sierra Nevada has successfully completed wind tunnel tests a several scale models of their winged spacecraft Dream Chaser. It appears from these tests that the spacecraft’s design works better than expected during ascent and re-entry.  The article also gives a quick overview of the status of all three commercial companies, and from this it really looks to me as if Boeing is the least aggressive in pursuing its construction effort. This is merely an impression, and not to be taken too seriously, but it really does look like Boeing is playing the public relations game, doing as little work as possible while trying to garner the most publicity while waiting for the award of the contract.

Tuesday  20 May 2014 / Hour 3, Block C:  Russ Roberts, Hoover and EconTalk, in re: Diane Coyle, author of GDP: A Brief but Affectionate History, talks with EconTalk host Russ Roberts about the history of GDP, its uses, and its abuses. Topics discussed include the origins of GDP in the developed countries, the challenges of measuring the service sector, the challenges of dealing with innovation and product diversity, whether GDP should be supplemented with other measures of human well-being, and the challenges of dealing with internet-based goods that produce  a great deal of satisfaction but make a much smaller impact on measured economic activity.

Tuesday  20 May 2014 / Hour 3, Block D:  Russ Roberts, Hoover, EconTalk and Poitico, in re:   Why Frank Underwood Is a Democrat

Hour Four

Tuesday  20 May 2014 / Hour 4, Block A: Hundred Days: The Campaign that Ended World War I by Nick Lloyd, Part One (1 of 4).

Tuesday  20 May 2014 / Hour 4, Block B: Hundred Days: The Campaign that Ended World War I by Nick Lloyd, Part One (2 of 4).

Tuesday  20 May 2014 / Hour 4, Block C: Hundred Days: The Campaign that Ended World War I by Nick Lloyd, Part One (3 of 4).

Tuesday  20 May 2014 / Hour 4, Block D: Hundred Days: The Campaign that Ended World War I by Nick Lloyd, Part One (4 of 4).

..  ..  ..