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March 14, 2008

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anduril

Not surprisingly, Steve Sailer (who is widely ignored with reason) has some relevant--and recent--comments on this topic:

Obama is perfect pseudo-African American Harvard AA admittee.

Back in 2004, the NYT reported:

“While about 8 percent, or about 530, of Harvard's undergraduates were black, Lani Guinier, a Harvard law professor, and Henry Louis Gates Jr., the chairman of Harvard's African and African-American studies department, pointed out that the majority of them — perhaps as many as two-thirds — were West Indian and African immigrants or their children, or to a lesser extent, children of biracial couples.

“They said that only about a third of the students were from families in which all four grandparents were born in this country, descendants of slaves. Many argue that it was students like these, disadvantaged by the legacy of Jim Crow laws, segregation and decades of racism, poverty and inferior schools, who were intended as principal beneficiaries of affirmative action in university admissions.”

By Gates's and Guinier's standards, Barack Obama should be the perfect example of the wrong kind of person to get affirmative action: his father was an elite immigrant (Obama Jr. was both a Harvard legacy as well as affirmative action admittee) and his mother was white. The Honolulu preppie's exposure to African-American culture came through watching Soul Train on TV.

My vague impression is that African immigrants tend to be descended from the slave-dealing classes of the days of yore. (I vaguely recall that Gates ran into some of this while filming his PBS series on Africa -- the educated Africans he mostly conversed with in Africa with tended to be the descendants of the people who caught and sold his ancestors to the white man). [Comment: Or, just as or more likely, to the Arab slavers.]

I wrote in VDARE.com in 2004:

The personal motivation of Gates, who has risen to be (as he likes to joke) “the head Negro in charge” of African-American studies in this country, is straight-forward.

He’s one of the few members of the black academic elite whose background is typical for the average middle-aged African-American. Gates’ father was a millworker in West Virginia.

The background of Guinier, whose nomination to a high post in the Clinton Administration was famously killed by Clint Bolick's skewering her as a “quota queen,” is more complicated. She is exactly the kind of dubious affirmative action beneficiary she is protesting.

Guinier looks like she could be the late Gilda Radner’s half-sister because her mother was Jewish. Her Jamaican-born father Ewart Guinier was a prominent Communist Party USA labor leader. Much of her career has been an extrapolation of themes from his life. For example, she advocates the kind of complex multiple voting schemes that helped the CPUSA elect two New York City councilmen during her father’s heyday, before the CIO expelled his union for being a Stalinist front.

So, Guinier's old-fashioned Communist upbringing has helped make her more sensitive to class unfairness than is fashionable on the left today, where race trumps class.

Of course, Barack Obama has done pretty well for himself with all the affirmative action breaks he has received. In contrast, his wife Michelle, who is from exactly the kind of all-American working class black family that Gates and Guinier would prefer that preferences go to, has somewhat floundered about, wasting her admission to Guinier's Harvard Law School, quickly dropping out of the legal profession and devoting most of her career since to being a political insider getting paid for diversity make-work. So, maybe there's a good reason that Harvard has largely given up on traditional Michelle-style American blacks in favor of Barack-style exotic newcomers and blacks who were raised by whites.

clarice

Sowell's book on the subject was an eye opener for me. I do not now remember who first persuaded me to read it, but until I did, I was okay on AA and bought the carp about it. Afterwards, I became a foe of it. I passed the book on to my husband who underwent the same transformation.

I had many opportunities to counsel young black kids about their college choices, and used him as a guide to talk them out of going to schools above their abilities even though those places were offering them the sun and the moon. Every one of the kids I counseled loved the colleges they went to and succeeded there. The gal I counseled to apply to Harvard, graduated with high honors in three years --she entered when she was 16--and then graduated from Yale law school with a dual degree in law and business management. Her dad was Nigerian her mom of African American descent had grown up in Brazil because her parents, both college grads, wanted to live in a less racist climate.
Sowell, I maintain, had a powerful indirect effect on the lives of these kids, saving them from sure ruin.

Soylent Red

The Honolulu preppie's exposure to African-American culture came through watching Soul Train on TV.

Holy smokes...

This means I'm black.

anduril

They're at it again! Recession Is Inevitable, says the WSJ. I really like the reassuring last paragraph:

Globally, total credit losses of $1.4 trillion will cause a contraction in world GDP of 2.5 percentage points, or half the current rate of global growth. So the global economy will become a gray, dull world of semi-recession and sticky inflation that will last a long time. Without major policy blunders, however, it won't be a 1930s-style depression.

A "gray, dull world of semi-recession and sticky inflation" sounds to me like Carteresque stagflation by a different name. Great! But not to worry--with our current economic team at the controls, what reason is there to think there could be any major policy blunders?

hoosierhoops

The Honolulu preppie's exposure to African-American culture came through watching Soul Train on TV.

Holy smokes...

This means I'm black.

Posted by: Soylent Red

707
( That's what happens when you fall backwards from your chair laughing out loud )

Sara

This is one of the funniest comments about AA that I've read this primary cycle:

A Consequence of Affirmative Action

Hillary Clinton’s battle with Barak Obama is not about who would make a better president, but of affirmative action’s presumption that the outcome of equality can be achieved by the forced replacement of top candidates with brown skin and boob quotas.

While they could never achieve the universal equality now celebrated in Cuba and North Korea, liberal Democrats kept racial discrimination alive in America by shifting its historic intolerance from black Americans toward performance-driven white men – and by forcing Americans to accept the consequence of mediocrity in silence to avoid indefensible charges of racism.

As lifelong beneficiaries of affirmative action, Hillary and Barak both suffer from delusions of entitlement. Their implacability is fueled by Hillary’s refusal to become Barak’s bitch, which is as unthinkable as Barak becoming Bill and Hillary’s houseboy. Conservatives have waited decades to see this play out.

MikeO

The idea of trying to level a playing field by futzing with the scoreboard is ridiculous on its face.

Academic admissions, government employment, and other parts of life that play like a game can show "results" from throwing handicaps some people's way (so long as consequences are ignored), but spotting me thirty strokes won't improve my golf game to the point where I can earn a living on the PGA tour.

Like any policy based on denying reality, Affirmative Action hurts those whom it was supposed to help. The only benefactors are the bureaucrats paid to design and implement the fantasy programs.

MikeO

Oops. That should be "beneficiaries" rather than "benefactors."

anduril

Anyone up for a little economic alarmism? Bear Stearns exposed as a bank saddled with toxic sub-prime debt.

Obviously I don't have a clue about any of this, but US sources seem to be in agreement with the idea that there is a recession looming. I saw an article in a mainstream newspaper today questiong, with a recession headed our way, how will the Dems pay for their big spending plans? Good question. Pull a Hoover and raise taxes--on the "rich"?

Big American finance houses have collapsed before. ...

The implosion of Bear Stearns is more dangerous.

A host of other banks, broker dealers, and hedge funds have played the same game, deploying massive leverage at the top of the credit bubble to eke out extra yield. Dozens of them are saddled with the same toxic debt - sub-prime property, credit cards, auto loans, and mountains of unsold paper from the merger boom.

This time the market for default insurance is flashing bright red warning signals across the entire spectrum of US finance.

The swap spreads on Lehman Brothers rocketed to 465 yesterday, mirroring the moves in Bear Stearns debt days before. Fannie Mae and Freddie Mac - the venerable agencies created by Roosevelt that underpin 60pc of the $11 trillion mortgage market - had a heart attack on Monday. Their bonds were in free-fall, threatening to set off another cascade of bank writedowns.

These are not sub-prime outfits. They sit at the apex of the US mortgage credit industry. Hence the dramatic move by the Fed this week to offer a $200bn lifeline, agreeing to accept Fannie Mae and Freddie Mac issues as collateral.

Had the Fed delayed, many traders believe Wall Street would have plunged through resistance levels risking a full-fledged crash.

The 'monoline' bond insurers - MBIA, Ambac, and others - that guarantee most of the $2,600bn market for US municipal bonds have seen their shares collapse by 90pc since the Autumn.

They are still battling to raise enough to capital to save their 'AAA' ratings. Should they fail, the insured bonds will be downgraded in lockstep. Pension funds would be forced to liquidate huge holdings. As New York Governor Eliot Spitzer said before his own liquidation, such an outcome is too dreadful to contemplate.

You have to go back to the banking crisis of the Great Depression to find a moment when the financial system as a whole seemed so close to the precipice.

...

In those days the contagion spread slowly to the rest of the world. It is much swifter now. The Swiss bank UBS has suffered US sub-prime losses on a scale to match Merrill Lynch and Citigroup, thanks to the curse of mortgage securities.

"We are now experiencing the first truly major crisis of financial globalisation," said the Swiss central bank governor Philipp Hildebrand this week.

"Never before have banks seen such destruction of their balance sheets in such a short time. Moreover, there are signs that the problems are spreading. The risk premiums on commercial property, consumer credit and corporate loans have risen sharply," he said.

Debt levels have been much higher than in the Roaring Twenties; the new-fangled tools of structured credit are more opaque: the $415 trillion nexus of derivative contracts is untested. Nobody knows for sure if the counter-parties are able to deliver on vast IOUs, or whether the construct is built on sand.

What keeps Federal Reserve officials turning at night is fear that the "financial accelerator" will now set off a vicious downward spiral. There is a risk of "very adverse economic outcomes," said Fed vice-chair Don Kohn.

Albert Edwards, global strategist at Societe Generale, said the toppling banks are merely a symptom of a deeper rot. "The banks are not the problem. Nor even the grotesquely leveraged funds. The problem is that an economic bubble financed by ridiculously loose monetary policy is unravelling," he said.

"US house prices have a lot further to fall, which will simply crush the global economy. The lesson from Japan in the early 1990s is that the death dance goes on and on and on," he said.

The Fed blundered badly in the Slump, delaying rate cuts for too long. It allowed the money supply to implode.

It is acting with breath-taking speed this time. Rates have already been cut from 5.25pc to 3pc, and will be slashed again this week. New means of showering liquidity on the banking system are being devised each weak.

As luck would have it, the world's greatest expert on the financial causes of depressions - Ben Bernanke - happens to be chairman of the Federal Reserve.

anduril

Front page at the WSJ: Debt Reckoning: U.S. Receives a Margin Call.

I'm going to paste in some edited cuts--follow the link for the full story:

The U.S. is at the receiving end of a massive margin call: Across the economy, wary lenders are demanding that borrowers put up more collateral or sell assets to reduce debts.

The unfolding financial crisis -- one that began with bad bets on securities backed by subprime mortgages, then sparked a tightening of credit between big banks -- appears to be broadening further. For years, the U.S. economy has been borrowing from cash-rich lenders from Asia to the Middle East. American firms and households have enjoyed readily available credit at easy terms, even for risky bets. No longer.

Recent days' cascade of bad news, culminating in yesterday's bailout of Bear Stearns Cos., is accelerating the erosion of trust in the longevity of some brand-name U.S. financial institutions. The growing crisis of confidence now extends to the credit-worthiness of borrowers across the spectrum -- touching American homeowners, who are seeing the value of their bedrock asset decline, and raising questions about the capacity of the Federal Reserve and U.S. government to rapidly repair the problems.

Global investors are pulling money from the U.S., steepening the decline of the U.S. dollar and sending it below 100 yen for the first time in a dozen years.

...

Hopes are fading fast that the U.S. economy was suffering from a thirst for liquidity that standard Fed remedies could quench. Former Treasury Secretary Lawrence Summers, speaking in Washington yesterday, said he sees "an increasing risk that the principal policy tool on which we have relied -- the Federal Reserve lending to banks in one form or another" -- is like "fighting a virus with antibiotics."

Bob Eisenbeis, a former executive vice president of the Federal Reserve Bank of Atlanta, says the problem is more than an inability to find ready buyers for assets. "It is time to step back and recognize that the current situation isn't a liquidity issue and hasn't been for some time now," said Mr. Eisenbeis, the chief monetary economist for Cumberland Advisers. "Rather, there is uncertainty about the underlying quality of assets -- which is a solvency issue, driven by a breakdown in highly leveraged positions."

President Bush, speaking in New York and in a television interview yesterday, showed little appetite for further action...

But few in markets and elsewhere are convinced that the worst is over for the U.S., as each player moves to protect its own interests against potential calamities seen as improbable just a few months ago. Bear Stearns reassured investors earlier this week that it was solvent, but speculation that Bear faced a liquidity crunch had some traders and hedge funds moving to limit their exposure to it. Yesterday, J.P. Morgan Chase & Co. and the Federal Reserve Bank of New York offered emergency funds to keep the troubled investment bank afloat.

The loss of confidence is now spreading beyond the biggest banks, with their well-publicized losses on subprime and other risky assets, to regional and small banks....

There's little sign yet that the worst is past....

While there is continued debate about how to treat the current disease, there is a consensus emerging on the causes. "Soaring delinquencies on U.S. subprime mortgages were the primary trigger," the heads of the Treasury, Federal Reserve and Securities and Exchange Commission said in a lessons-learned report. "However, that initial shock both uncovered and exacerbated other weaknesses in the global financial system."

Kenneth Rogoff, a Harvard University economist, says the current difficulty has many mothers -- the housing bubble, the subprime problem and the fact that the value of U.S. imports has long outstripped the value of exports. The current account deficit -- the broadest measure of the trade deficit -- burgeoned, and the U.S. needed to borrow ever larger amounts of cash from abroad to fund it.

For years, Mr. Rogoff and like-minded economists harped that the U.S. current account deficit was unsustainable....

"The dollar and subprime -- they're two sides of the same coin," says Princeton University economist Hyun Song Shin.

If this develops into a financial tsunami, there will likely be a following political tsunami.

Bob

Notre Dame law school is ranked 28th by U.S. News, while Ohio State is ranked 31st. Is there any reason at all to assume that a student who would well at Ohio State would struggle at Notre Dame?

Are you still mad about the Fiesta Bowl?

Bob

Notre Dame law school is ranked 28th by U.S. News, while Ohio State is ranked 31st. Is there any reason at all to assume that a student who would well at Ohio State would struggle at Notre Dame?

Are you still mad about the Fiesta Bowl?

Jason

Just a heads up on some bad statistical rhetoric.

"Racial preferences reduce the prospects of black students graduating."

This statement is false, or at least remains wide open, because the black students in question are different black students.

If the SAT score of one group of students (Affirmative Action beneficiaries) is lower than that of another group of students (black students at a non-AA school), and then the first group graduates at a lower rate than the second, that's no indication that Affirmative Action is a failure.

The same goes for the difference between black and white students' graduation rates under different programs of racial preference.

The question should be: controlling for SAT scores, do the outcomes of students admitted under racial preference perform better when they go to schools they might not have otherwise been able to get into than do students who do not attend such schools.

An even more policy-relevant question: controlling for SAT score and GPA, what is the change in socioeconomic status (SES) among students who attend college under racial preference programs vis-a-vis those who do not.

If you really want to do this, you need to take into account unobservable differences in drive and talent between student who score a 1400 SAT score and decide to go to college and those who do not. You also have to figure out the value lost from those students who may have been displaced by racial preference programs.

Ultimately, it's wicked complicated, and mostly we can just grab at answers, but making fervent assertions and when that doesn't work, simply making shit up...that doesn't really advance the dialog.

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