… unless the disclosed e-mails are proved to be forgeries or adaptations, worrying implications arise for the integrity of scientific research in this field and for the credibility of the scientific method as practised in this context.

The CRU e-mails as published on the internet provide prima facie evidence of determined and co-ordinated refusals to comply with honourable scientific traditions … This extends well beyond the CRU itself – most of the e-mails were exchanged with researchers in a number of other international institutions who are also involved in the formulation of the IPCC’s conclusions on climate change.

Compare and contrast with the official press response, which was that there was nothing to see in the Climategate files.

Climate science cannot credibly claim to be science.

Patients were left unwashed in their own filth for up to a month as nurses ignored their requests to use the toilet or change their sheets;

…

Wards were left filthy with blood, discarded needles and used dressings …

…

…  Food and drink were left out of reach, forcing patients to drink water from flower vases. …

The problem is that those would provide socialist medicine for the indigent, want to provide it for the middle class.  Singapore has truly socialist medicine for the poor, truly private medicine for the rich.  America has semi private medicine for all, which is a dreadful system, though probably not as bad as England’s system.

Bubbles can go on for a long time, and they always last longer than those calling the bubble expect.  Conversely, however, they always burst earlier than most people expect, and people do not realize the bubble is bursting until a considerable time after the bubble has in fact burst.  The bubble bursts when the smart money rushes to the exits, and the smart money rushes to the exits long before the vast majority realize that the smart money has upped and left.  You want to exit a bubble when the majority of the smart money, not the majority of the public, is exiting, which for the recent housing and triple A CDO  bubble was not 2008, but late 2005.

The cleanest and least destructive way out of this crisis will be to default on treasury bonds, but I fear the government may instead proceed with hyperinflation.

But after much fiddling, the money has mostly come to rest, in that the government is now the proud owner of about one trillion dollars of mortgage backed securities guaranteed by Fannie, Freddie, and the FHA, plus some Fannie, Freddy, and FHA debt.

The first graph in the above link is the money wizzing around in complicated circles to obfuscate who is at fault, the second graph is the bailout of private entities, other than General Motors, and the third graph is primarily the bailout of Fannie, Freddy, and the FHA.

That these Mortgage Backed Securities are “Fully guaranteed by Federal Agencies” implies that the vast majority of the crisis, the vast majority of the bailout, was dud mortgages rubber stamped Fanny, Freddie, and the FHA, that privately issued mortgage backed securities have been liquidated – that the dud mortgages underlying privately issued mortgage backed securities have been settled by foreclosure and bancruptcy, but the dud mortgages underlying Fannie, Freddy, and FHA issued mortgage backed securities are on the tax payers tab to the tune of about a trillion dollars.

Overtime, as the mortgages are resolved, the trillion dollars of mortgage backed securities will diminish with time.  In proportion as they were worthless, the agency debt will correspondingly increase.

Obama and his wife are typical affirmative action blacks.  Michelle’s Princeton thesis is a whine about racial prejudice and is full of spelling and grammatical errors.   Obama got a degree from Columbia without even showing up.  Obama can read from a teleprompter very nicely – except when he runs into a long sentence.  Similarly, most blacks can sing and dance and play the guitar better than most whites.  But Obama never delivers a speech ex tempore or from brief notes, unlike Palin, while Palin never pauses at inappropriate points in the middle of reading a long sentence from a teleprompter, unlike Obama.

The collateralized debt obligations underlying the present crisis were structured into tranches so that the highest rated tranches could not go bad if the payer merely missed a few payments.  What caused the crisis is that on very large numbers of the underlying mortgages, no one made a single payment.  When we compare the default rate in a lily white suburb or exurb, with the default rate in a suburb or exurb where the majority are members of protected minority groups, we see the default rate in the protected minority suburb is twenty to sixty times higher, telling us why so many mortgages have never received a single mortgage payment

But I saw the 2008 crash and subsequent downturn with my own eyes, and I’m convinced that mood played a key role.  The world freaked out, big time.  It was the economic analog of a riot.

I was there also, and it was entirely rational for everyone to try to get to the exits before everyone else.    No animal spirits involved.  In 2005 November I said “Now is the time to panic”, so I got to the doors comfortably enough, though it was starting to get crowded and a rush was setting in.  By 2008 – well if you had not realized it was time to get out before 2008, it was indeed the economic analog of a riot.

In 2005 November I was talking to real estate valuer, who told me that lenders were getting nervous about wildly inflated valuations.  I immediately saw what would unfold.  Real Estate prices were going up because people, mostly cat eating Mexicans with no money, no jobs, no prospects, and a past history of never paying their debts, were buying houses at inflated prices with no money down, and since they were not putting any money down, did not care how inflated the price was.  Obviously this could not go on, and when it stopped, everything was going to go to hell.  So as soon as some people thought it was going to stop, they ran, and as soon as they ran, other people started to suspect it was going to stop, and they ran also, until by 2007 it was a crazy rush to get out, and by 2008, too late.

So when I learned in 2005 November, that lenders were getting nervous, I realized that the rush to exits had begun, and immediately joined it.

Everyone knew that things were going to collapse, but wanted to stay in till the last minute because there was money to be made, so it was not animal spirits, but people trying to judge when to run to the exits.

He is going to tax the banks, and restrict proprietary trading by banks.  But proprietary trading had little to do with the crisis.

All the things that caused the crisis are still going:  the continuing misbehavior of Fannie, Freddie, and the FHA, the continuing regulatory pressure on banks to lower credit standards for non Asian minorities, and the continuing government created opportunity for banks to unload dud mortgages on the taxpayer.

Past private misbehavior was facilitated by the hedge fund activities of  too-big-to-fail AIG selling naked CDSs, and too-big-to-be-defaulted-on Goldman and Sach, purchasing naked CDSs.  These activities enabled banks to unload the dud politically correct loans that they made.

The misbehavior of AIG and Goldman was downstream of the center of the problem ? banks made dud loans, and then unloaded them thanks to the hedge fund activities of too-big-to-fail businesses, primarily AIG.  The problem was that the government wanted, and still wants, banks to make dud loans, and will do whatever it takes to get them to make dud loans.  When too-big-to-fail hedge funds ceased to facilitate dud loans, this was a crisis, which crisis the government has swiftly acted to remedy.

Today banks get to unload their dud loans directly on the government. The taxpayer is “stabilizing” the market for unwanted mortgages, which is a huge off the books housing subsidy to minorities, irresponsible borrowers, irresponsible lenders, and bums with no credit rating.

Precisely because AIG and Goldman have stopped their bad conduct, bad conduct that the government needed and wanted, government stepped in, and is now doing exactly the stuff that AIG and Goldman were doing.

The lesser hedge funds did the right thing throughout, and the smaller they were, the more right they were – naturally so, because if a smaller hedge fund screws up, no one bails them out.

The one populist intervention against fat cats that would be both effectual and popular is a special tax or special restrictions on businesses that are too big to fail, and this one populist and popular intervention is not proposed, and is highly unlikely.

Partly, of course, it is simply a massive swing against the Democrats.  The economy is collapsing, people blame the party in power.

But it also means more important and more interesting things:  Scott Brown was campaigning as the anti elitist candidate, brandishing a working class and underclass identity, such as his old truck and his conviction for shoplifting.  The elite is unpopular, not just one party of the elite.

This was a populist landslide.  People think that those running our country, Democrat and Republican, are evil, stupid, and insane.

Normally a populist movement is anti libertarian, but the massive crony capitalism of the last few years, Obama and Bush, has put populists on the libertarian side.  They want real capitalism, not crony capitalism where the losses are socialized but the profits are privatized.  They want capitalists to be free to take risks with their own money, and not free to take risks with the taxpayers money.

I would like to say that democracy is self correcting, and the populist masses will get what they want.  But they probably will not.  The elite is just too entrenched at every level of society, and the politicians are just their public relations officers.  Some politicians will be thrown overboard to appease the masses, some perfectly innocent businessmen will be falsely accused of crony capitalism, and punished to appease the masses, but then the elite will continue with business as usual.

To get the reforms the Tea Party wants, it would probably be necessary to proscribe Harvard, every organization with “environment” in its name, and everyone involved in “diversity”, in the way Nazis were proscribed in postwar Germany.

Observe what happened when various states passed plebiscites declaring affirmative action illegal.

Absolutely nothing happened, and that is the likely outcome of a thorough Teaparty victory in the US.  The elite will just continue doing what it does.  Reagan had a vision for ending Soviet power.  I do not see anyone with a vision for ending elite power and privilege.

This raises the interesting question:  Is the elite evil, stupid and insane?

Yes it is, and the disease is bound to get worse.  It is an inherent problem with theocracies.  The official priesthood tends to become more and more religious, while the masses become less and less religious.  The official religion gets sillier, tending to select silly people for priests.  To be part of the elite, you have to believe in an ever growing list of stupid stuff, such as “diversity” and global warming.  This selects for people who apply their smarts to deluding themselves, rather than connecting to reality.