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With the federal government working up a new housing ploy, I figured it’s timely to dredge up the 2008 short story I published in The American Conservative:


Unreal Estate

Memorial Day Weekend, 2005

“So, this guy joins a monastery where he’s not allowed to talk.” Travis, your brother-in-law, is telling a joke. He’s told it to you before. “After five years, the head monk tells him he can say two words. ‘Tiny room,’ the guy answers.”

“That reminds me,” Travis continues, “You kids have been engaged, like, what? Two years now? That’s great. No rush to get married, not with the market the way it is in West LA. Who can afford to marry and settle down in LA? I couldn’t. Georgie Cooney can’t afford to get married in LA.”

While you’re trying to figure out whether Travis means actor George Clooney or boxer Gerry Cooney, he’s already onto his favorite topic, “Still, isn’t it time to buy a place of your own? I mean, West LA’s a great place to meet somebody, but, c’mon, are you going to entrust your kids — and I know how much my wife’s little sister wants some (you know how women are, they can’t keep a secret) — to the Los Angeles United School District?”

You have this conversation, if you could call it a conversation, each time you visit your brother-in-law’s house. Travis lives out in the Santa Clarita Valley, an hour or two north of West Los Angeles. You get on the 405 at Pico, head over Sepulveda Pass, down through the Valley, onto the 5 and up through Newhall Pass into LA County’s northern exurbs.

You’re sitting on the edge of the Travis’s deck, overlooking a canyon lined with oaks and sycamores. It’s hotter out here than back in West LA, where your $1900 per month one bedroom apartment doesn’t have air conditioning because it seldom gets over 82. It’s hot out here, but it’s not bad. There’s a breeze blowing with a hint of the far-off ocean.

Travis says, “I’d be all for you staying in LA if you were an entertainment lawyer or something where you need to be working with the stars. But you manage a drug store and Emma’s a nurse. People buy drugs and get sick everywhere.

“I bought this place in 2000 for $255,000,” Travis says, repeating a number you know by heart now. “Here we are, five years later, and the Schmidts next door just sold their’s for $810,000. So I’m up, what, six, seven hundred thousand? The home equity loans have paid for some nice vacations, I’ll tell you. My house is my ATM.

“I know what you’re thinking,” says Travis, who generally does know what you are thinking.

“You’re wondering why I’m the lucky bastard who turned 32 in 2000 and decided it was the right time in my life to get out of an apartment in LA and buy a house back when houses in California were cheap. Meanwhile, you’re 32 in 2005, when they’re expensive. Well, they seemed expensive then, too. But I took the plunge anyway.

“I also know you’re thinking you don’t have $810,000. Who does? That’s what they got mortgages for. And you’re good with numbers so you’ve already figured out what a 20 percent down payment on $810,000 is. It’s, like … a lot.

“Okay, coupla things you need to bear in mind.

“First, Emma’s told me about how your dad always talks about the years saving up for the 20 percent down payment he made when he got that 30 year fixed rate mortgage on his little place in Sherman Oaks. “That’s ancient history. Dude, nobody puts down 20 percent down anymore, no matter how iffy they seem.”

Travis’s voice has gone up a third of an octave. When he’s talking about the Lakers or whatever, he’s laidback. But when he gets going on real estate, which is more and more often over the last couple of years, he lets his inner Dennis Hopper out.

“These days, somebody arrives in California from Gautelombia and wants to buy a house, do you think they make him document his credit history? It’s in Spanish, and who knows how many million pesetas were worth a dollar in 1985, and besides, the courthouse in El Carrumbo collapsed in an earthquake anyway, so he doesn’t have a paper trail. Documents? He’s undocumented. He don’t need no steenking documents! He just pays some extra points on his rate, but that’s all on the backend. Everybody’s happy.

“Don’t you watch the news? The President says down payments are un-American because they keep minorities from buying houses. But you don’t have to be diverse to get a zero down loan. IndyMan is happy to hand them out to everybody.

“Second thing, Santa Clarita seemed like a long way out when I moved from Venice in 2000. So, maybe you got to move a little farther, like out to Palmdale, Lancaster. Antelope Valley’s the new Santa Clarita!”

You’re not quite sure how it happens, but ten minutes later, you’re standing on his driveway admiring the rims on Travis’s Lexus SUV, which are bigger than the tires on your Corolla. Soon, you’re rolling northeast on the 14, past the slanting Vasquez Rocks where, according to Travis, lots of Westerns were filmed, but you only remember them from Bill and Ted’s Bogus Journey. The highway turns north away from the mountains through the high desert. A sign says you are heading toward “Edwards AFB.”

“Edwards Air Force Base!” exclaims Travis. “T he Right Stuff, man! That’s where Chuck Taylor broke the speed barrier in 1957. This is All-American country out here,” he says, gesturing vaguely at the brownish-gray sagebrush. “Granted, it’s a haul from the jobs in LA, but with Iraq calming down now that they captured Saddam Insane, soon they’ll be pumping like crazy from those Iraqi oilwells and the price of gas will be back down to a $1.00 per gallon.”

You pass another sign. This one reads, “San Andreas Fault.” Travis doesn’t seem to notice.

Once off the highway, you see at least one person standing at every intersection twirling or jiggling a giant arrow pointing to an open house. “Human Signs,” nods Travis. “Like back in the Depression when guys would walk around wearing sandwich boards reading ‘Eat at Joe’s.’ But this is the opposite of a depression. Real estate commissions are six percent, so, on a $400k house, that’s $20k, which pays for a lot of twirling.”

Stretching off to the horizon are half-built houses and recently finished ones. Eventually, you follow one particularly active arrow to the Cypress Creek Estates. “Yeah, I know,” says Travis, “The nearest creek is 20 miles south and the nearest cypress tree is 100 miles west in Santa Barbara. But that’s not the point, the point is that everybody in Guatelombia grew up watching Baywatch and has wanted to move to California ever since. Do you know how many people there are in the world? Well, I don’t either, but, trust me, it’s a big number. There’s an endless supply of people who want to live in California. And their brothers, too! Do you think Bush is going to shut the borders? The President says, “Family values don’t stop at the Rio Loco.’”

Travis’s voice gets intense. “They’re coming, man, and nothing can stop them. It’s the American Dream!”

“Same with the money,” he continues, in a more relaxed tone. “When the Chinese get a check from Wal-Mart for a billion bucks for their latest boatload of plastic crud, they ask the smartest guy in Peking where to invest it. He calls up the smartest lad in London, who tells him, “Lend it to people buying California real estate. It’ll be safe as houses.” Nobody cares where they lend in California, just so long as it’s in California. You should see the prices they’re getting this year for dumps in Hawaiian Gardens, Bakersfield, Pacoima, Compton. Compton.

“See, in Abu Dubai, nobody knows nothing about Hawaiian Gardens, other than it’s in California. Over in Arabia, Sheik Rattleandroll thinks, ‘It’s like “Hawaii” and it’s full of “Gardens,” so how bad could it be?’

“Although, you’d figure,” muses Travis, shaking his head, “That by now, even an Arab would’ve heard of Compton.”

“There’s no stopping them. And the same with normal American people moving to the exurbs. Every year, kids get out of college and move from Mom and Dad’s house in the boring ‘burbs to an apartment in the sexy city. They love hanging out in Hollywood. But after ten years or so, they’ve found somebody. The one. They start looking at the price on those cute little cottages around the corner from their favorite restaurant on San Vicente. The price has seven digits. And it doesn’t start with a “one.” They wonder, “How does anybody buy in the city?” They finally realize: people do it family style. If they’re American and they buy on the Westside, then you know that Mom and Dad gave them a half mil, at least. If they’re Armenian, they have mom and dad move in with them, along with cousin Aram and his uncle-in-law. But Americans can’t live with their relatives. We go nuts. So, it’s out to the exurban frontier for us. It’s a perpetual motion machine.”

You pull up in front of an attractive Mediterranean-style model house. Two stories, 3,150 square feet, the sheet says. It seems enormous — both compared to your apartment and to its lot, with its miniature front yard consisting of a tiny sapling and a tinier sodded lawn. It’s hotter than in Santa Clarita, so the walk from the Lexus to the front door through the grit-laden wind has you sweating. “It’s breezy out here, but that’s good, it lowers the wind-chime factor,” observes Travis.

Then you’re hit by the blast of air conditioning, and you’re standing in the Great Room, with a 20’ ceiling. “Sure, it seems kind of big, but that’s the crucial element,” explains Travis. “What are they asking, $450k? That’s not a cost to you, that’s an investment, like joining a country club. The sticker price keeps out the riff-raff. You don’t want every peon in Guatelombia who grew up dreaming about Baywatch moving in next door to you, do you?

“What you want is like … well, look at Valencia High School near my house. It’s diverse. It’s … What does the LA Times call the neighborhood when there’s a gang shooting in South Central? … It’s vibrant. But Valencia High School is not too vibrant, if you know what I mean. Valencia’s like mostly white, some Asian, the black kids’ parents are all celebrities. The son of what’s his name, Wesley Snipe Dogg, rushed for 2,500 yards last year. The Latino kids are all from solid home-owning families, no accents, everybody’s dad is a contractor or something. You can’t afford to buy in my neighborhood if you aren’t in a cash business.”

One stair creaks loudly as you ascend to the lavish master bedroom suite on the second floor. “The construction’s just settling in,” assures Travis. “This house is only, it says here, nine months old. The owner is flipping it. Probably moving to a 4000 square foot house with the $50k he’s going to make and do it again. With a no down payment mortgage and a low teaser rate for the first two years (which you deduct on your 1040, by the way), that’s about a … a million percent return on investment. Can you get that kind of interest on your CDs?”

“In fact, I think I’m going to pick up one of these babies, too, and sell it in six months. We’ll be neighbors! Sort of. The mortgage company get a little snottier about down payments and interest rates when you tell them it’s an investment, so I’ll just check the “owner occupied” box. The broker doesn’t care. He gets his commission, then Countrywise bundles it up with a thousand other mortgages and sells it to Lemon Brothers. The Wall Street rocket scientists call this “secretization” because nobody can figure out what anything’s worth. It’s a secret.

“Lemon sells shares in the package all around the world. The Sultan of Brunhilde ends up owning a tenth of your mortgage. Do you think the Sultan’s going to drive around Antelope Valley knocking on doors to see if you’re really living there?”

“Maybe you’d like to come in with me on it, buy yourself a one-eighth share?”


Thanksgiving, 2005

The sky over the Antelope Valley is blue, your Marathon Sod minilawn is green, the temperature is 68, and your bride and her sister are cooking the turkey in your new granite counter-topped kitchen. Travis and you are standing in your driveway in Cypress Creek Estates, admiring the house you two own next door. Travis is explaining, “So, after ten years, the head monk, the abbatoir, tells the new guy he can say two more words. And the guy replies, ‘Roommate snores.’” By the way, this couple from Hermosa Beach counteroffered me $477k on our little investment. I told them I’d think about it. Nice people, they’d make good neighbors for you. But, I don’t think I’m going to sell it yet. I’m going to wait for an even $500k. There’ll be no problem getting that next spring. Yeah, it’s a nice neighborhood. Quiet.”

That it is. You don’t have all that many neighbors because about a third of the homes on the street appear to be unoccupied, owned by speculators waiting to flip them. And the people who do live on your street tend to start their commute to LA before dawn and get back after dark. It’s quiet, except on Sunday, when a stream of looky-loos pour through for the open houses.


Voice Mail, April 2006

“Hey, it’s Travis. Look, my accountant was crunching the numbers, and he says I’ve got a slight cash flow problem, what with me paying for 7/8ths of an empty house and the market not quite hitting our target price yet. So, he says that we should rent it out for awhile, just until we sell it. The thing is, what with everybody out there buying with no money down, there aren’t that many people left in the rental market. Most of the local jobs are in construction, building houses. (Well, construction and being a Human Sign.) Now, my accountant keeps the books for this contractor, who tells him he’s got some construction workers from this village down south who need a place to live. Real quiet hardworking types. You hablo un poco Espanol, right? If you need to talk to them, talk to their leader, Juan. He speaks Spanish. The rest of them only speak Mixed-Up. It’s an Indian lingo. But you won’t need to talk to them. They’re very quiet.”


July 2006

It’s Sunday afternoon. Travis peers down as you pry a flattened disk of lead out of the miniature crater in your driveway. “Well, they are real quiet, hardworking types from Monday through Friday,” he says. “You’ve gotta admit that. I guess they just want to relax on Saturday, have a little fiesta, drink some cerveza, shoot their pistolas in the air. It’s their culture. What are you, prejudiced?”

You look at Travis.

“Okay, okay, I’ll go talk to Juan.”

He comes back 20 minutes later. “Juan is gone, man. That’s what they kept telling me: ‘Juan is gone.’ One of the fellows had his stomach bandaged up. He just got back from the emergency room. I couldn’t quite follow what they were saying, but I think Juan had a bottle of tequila on Saturday night and stabbed this dude. Nothing serious. Just a friendly little argument. C’mon, they aren’t gangbangers, they’re working men … Okay, well, then Juan headed for the Border like OJ in his white Bronco. Juan is gone, and with the rent money they all owed us, too. Oh, man…”


Voice Mail, September 2006

“Hey, it’s Travis. I got good news. We’re not going to mess around anymore trying to extract our rent from some mob of illegals. No way, Jose. Instead, we’re going to get paid by check on the first of each month straight from the U.S. Treasury! The Department of Housing and Urban Development. Section 8 rent vouchers. They’re tearing down a housing project in the, uh, LA – Long Beach area, in, uh, Compton, I guess, to be precise, and they’ve got this highly respectable elderly grandmother who needs a place to stay with her family. Really cute grandkids. A few daughters, too. She wants a safe place with good schools to raise them. Actually, she’s not all that elderly. The HUD man said she’s 39. A church lady, you know, pillar of the community, big hat, all that. You’ll like your new neighbors.”


Voice Mail, December 2006

“It’s Travis. Okay, okay, I’ll admit that I hadn’t really thought through the part about the daughters having boyfriends, or grandma having boyfriends either, for that matter. But I think this whole Bloods v. Crips thing is being blown way out of proportion. It’s just graffiti. And lots of kids wear red these days. It’s a very In color. And these days all the young people make those goofy signs with their hands. For that matter, how can anybody know for sure that the Chevy that cruises by every night is full of MS-13 gangbangers planning a drive-by on the Bloods next door as payback for the race riots at the County Jail in Castaic? Are you sure you read the tattoos on their necks right? It’s nighttime, how can you be certain that their neck tattoos say ‘MS-13.’ Maybe they just have, like, ‘Mom’ tattooed on their necks. Did you think about that?”


May 2007

“So, after fifteen years, the abbadabbadoo tells the new monk he can say two more words, and—Whoa!” Travis flinches when the 120-pound Presa Canario lunges at him. The steel chain securing the dog to the front of the house across the street from your house snaps taut and its massive jaws come up short. “Man,” says Travis, shaken, “That’s one of those dogs that the Aryan Nation breeds to guard meth labs, isn’t it? What’s in that house? A meth lab? No, don’t tell me. I don’t want to know.”

“Look at this neighborhood,” he says, his dismissive gesture taking in the empty malt liquor bottles on the curb, the wheelless car jacked up on a brown front lawn, and the knots of sullen youths playing hip-hop and reggaeton on boomboxes. “All these speculators buy houses, hit a little bump in the road, need some cash, then start renting them out to lowlifes to get by until they can cash in. Property values drop like a rock. It would be no problem if just one investor did that, but when all these speculator jerks do it, the whole ‘hood is hosed.

“Oh, yeah, I came by to mention that in June the mortgage rates reset after two years. Bush put this new guy in at the Fed, Ben Barnacle, and he’s raised interest rates. So that will push up your share of the payment.”


Voice Mail, June 2007

“It’s Travis. Sorry to hear about you having to sell both your cars to make that new monthly nut. Taking the bus to work in that heat, man, that’s rough.

“But, that’s all history. I’ve got great news! I sold the house next door. To the Section 8 grandma. Who else would buy it? I only got what we paid for it, but I figure that was the smart play. She didn’t think she could qualify for the mortgage, but I told her to put down as her household income all the money made by all the people who have ever stayed there. What, is Washington Mutant going to be so racist as to question that a woman like her could have an income of $160,000?

“Don’t thank me for getting you out of that monthly payment. It’s the least I could do for you, bro.”


Phone call, October 2008

You pick up the ringing phone.

“It’s me, Travis. Long time no hear! Hey, I’m sorry about houses in your zip code being down 55 percent versus last year. Bummer.

“Anyway, I’ve been listening to Senator Omama’s speeches about how he is going to invest hundreds of billions to make America energy independent in ten years. So, I wanted to let you in on the next big thing. Alternative energy! When the Democrats get in come November, alternative energy will be bigger than houses. I’ve got great investments lined up with some start-ups in this emerging growth sector. Like biodiesel trolleys. Al Gore is this close to making a big investment. I just need a little help making the minimum required investment. They don’t need chump change. This is just for the big money boys. So, are you in or are you out?

You say nothing.

“Are you going to quit on me? Remember, quitters never prosper.”

You say: “I quit.”

Travis says: “Well, it’s about time. You’ve done nothing but bitch and moan since I met you.”

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On the last day of the ill-fated Bush Administration, the Dow Jones average stood at 8,281, down catastrophically from its 2007 peak—yet still almost 25 percent higher than the Dow’s close on Friday, March 6, 2009 of 6,627.

You might think that George W. Bush would be an easy act to follow. After all, he was inept enough to overlook the basic rule of politics that kept the Bush family’s friends in Mexico’s PRI party in power for somany years: Make sure the economic collapse happens right after theelection, not right before.

And yet, what is now technically the “Obama Bear Market” shows that Obama may be down to the challenge of being Bush’s successor.

It’s important to understand that Obama was never a Depression Democrat who worries that the capitalist system can’t produce enough wealth. Obama didn’t run for President to help Americans earn more money. By upbringing, he’s more a Sixties person who assumes that businesspeople will continue—in their unseemly way—to produce plenty of riches, which a better sort of person (such as, say, himself) should redistribute in a more equal and refined manner.

When Obama began his campaign in early 2007, this worldview made a certain amount of sense. In early 2009, however, it’s obviously out of date. We aren’t as rich as we thought we were before the bubble burst.

So far, Obama has implemented a three-pronged response to the Great Crash:

With Obama increasingly floundering, it’s time to revisit the questions that nobody seemed to have had the time to ask during Obama’s 20-month election campaign:

Who is he? What are his bedrock “emotional economics?”

Fortunately, the President published an informative 460-page memoir in 1995, Dreams from My Father: A Story of Race and Inheritance.

Unfortunately, few have paid much attention to what Obama has written about himself. The prose style is too elliptical and the story too boring to pay it careful attention.

That’s why I wrote my reader’s guide to the President’s autobiography, America’s Half-Blood Prince: Barack Obama’s “Story of Race and Inheritance.” In this article adapted from my book, I’ll explain what these dreams from his economist father were.

Barack Jr. barely knew Barack Sr., who had abandoned his wife and toddler son to obtain a Masters’ degree in economics from Harvard before returning to Kenya to grab for the brass ring of power.

Instead, the son learned his father’s ideology from his still-smitten mother (with some assistance from her father Stanley, a failed salesman, but little from his skeptical maternal grandmother Madelyn, a bank executive). His mother’s indoctrination is the reason Obama grew up to write a book named after the father he barely knew.

It was in Indonesia, strangely enough, that his white mother began to painstakingly instill in little Barry Soetoro his biological father’s leftist politics of race.

This was his mother’s stratagem in her passive-aggressive war on Lolo, her unsatisfactory Asian second husband. Ann, a romantic leftist whose magnum opus was a 1,067-page anthropology Ph.D. dissertation with the Onionesque title of Peasant Blacksmithing in Indonesia: Surviving and Thriving against All Odds , despised Lolo for dutifully climbing the corporate ladder at an American oil company to support his wife and stepson:

“Sometimes I would overhear him and my mother arguing in their bedroom, usually about her refusal to attend his company dinner parties, where American businessmen from Texas and Louisiana would slap Lolo ‘s back and boast about the palms they had greased to obtain the new offshore drilling rights, while their wives complained to my mother about the quality of Indonesian help. He would ask her how it would look for him to go alone, and remind her that these were her own people, and my mother’s voice would rise to almost a shout.

‘They are not my people!’ “[p. 47]

Annoyed at seeing her talented son fall increasingly under Lolo’s kindly but irksomely pragmatic influence, Ann decided that the perfect role model for Barack Jr. in learning self-discipline would be Barack Sr.

“She had only one ally in all this, and that was the distant authority of my father. Increasingly, she would remind me of his story, how he had grown up poor, in a poor country, in a poor continent … He had led his life according to principles that demanded a different kind of toughness, principles that promised a higher form of power . I would follow his example, my mother decided. I had no choice. It was in the genes.”

Over time, Ann’s strategy expanded to depicting the entire black race as the epitome of the virtues of self-discipline. Ann sounded rather like Obi-Wan Kenobi instructing Luke Skywalker in the glories of hisJedi Knight heritage:

“To be black was to be the beneficiary of a great inheritance, a special destiny , glorious burdens that only we were strong enough to bear.”[p. 51]

One implication of Ann’s line of thought is that the only explanation for why blacks, these embodiments of all the best values, weren’t rich and happy was, as Rev. Dr. Jeremiah A. Wright Jr. would point out to Obama many years later, that white folks’ greed runs a world in need.” All that blacks needed to lead them to the wealth they deserved were audacious political leaders who had achieved “a higher form of power ,” such as that nation-building statesman Barack Obama Sr.

Even as an ethnic activist in Chicago , the adult Obama still believed whole-heartedly in the image concocted by his mother of his father (who, in reality, had turned into an alcoholic blowhard):

“All my life, I had carried a single image of my father, one that I had sometimes rebelled against but had never questioned, one that I had later tried to take as my own. …It was into my father’s image, the black man, son of Africa, that I’d packed all the attributes I sought in myself, the attributes of Martin and Malcolm, DuBois and Mandela. … [M]y father’s voice had nevertheless remained untainted, inspiring, rebuking, granting or withholding approval. You do not work hard enough, Barry. You must help in your people’s struggle. Wake up, black man!” [p. 220]

Obama never quite got over his mother’s programming that 1) Being a politician, especially a politician who helps in his people’s struggle, is the highest calling in life, far superior to being some soulless corporate mercenary like her second husband; and 2) What blacks need is not more virtue, but better political leadership to achieve “a higher form of power .”

Or, in Obama’s case, the highest.

Barack Obama Sr. was the father whose dreams, as refracted through his mother’s urgings, have guided the politician’s life. But what were those dreams?

Dreams from My Father is a book about dreams and the methods for realizing those dreams. It offers an extended meditation on ends and means, although not in the usual sense of questioning whether theends justify the means. Instead, Obama’s concern is whether the means facilitate the ends. Obama displays few doubts about the superior morality of his father’s putative goals, as conveyed by his mother: namely, the pursuit of power for the benefit of the black race. Racialism is simply a given to the memoirist.

As an adult, Obama slowly learns the hard truth: his father’s means had not been good enough.

In his subsequent life, the son, displaying admirable self-discipline, has methodically avoided exactly those things that thwarted his ambitiousfather: drunkenness, polygamy, boastfulness, imprudence, the Big Man syndrome (excessive generosity to impress distant relatives and hanger-ons), frankness, and marriage to white women.

We actually have a fairly good idea of what Barack Sr., a scholar both brilliant (he graduated summa cum laude from the U. of Hawaii in three years) and boastful, likely told Ann about politics and economics between the time he impregnated her when she was a 17-year-old coed and the time he left her when she was 20-year-old mother. Barack Sr. published in July 1965 a 5,400-word article called Problems Facing Our Socialismin the East African Journal, which was dug up in the UCLA library by Greg Ransom of PrestoPundit in 2008.

Barack Sr.’s first appearance on the historical stage was this reply to afamous paper by Tom Mboya, the pro-American Kenyan leader who was second to Jomo Kenyatta in influence. Mboya had advocated that the newly decolonized Kenya maintain an economic policy that was non-Marxist and non-ideological, with room for private enterprise, foreign investment, and protection of the property rights of whites and Asians .

Zaiki Laidi and Patricia Baudoin wrote in The Superpowers and Africa :

“The debates pitted the liberal internationalist Mboya against endogenous communitarian socialist Oginga Odinga and radical economists Dharam Ghai and Barrack [sic] Obama, who critiqued the document for being neither African nor socialist enough.”

In Obama Sr.’s view, all of Mboya ‘s errors were on the side of toolittle government control of the economy or too little expropriation of non-blacks .

Still, it’s possible to exaggerate Obama Sr. ‘s leftism . He didn’t advocate eradicating all private enterprise. His concern was less with socialism v. capitalism than with blacks v. whites and Asians . Indians dominated small business in Kenya, and the elder Obama was not happy about it.

“One need not to be Kenyan to note that most hotels and entertainment places are owned by Asians and Europeans. One need not to be Kenyan to note that when one goes to a good restaurant he mostly finds Asians and Europeans …”

In his characteristic peremptory tone, Obama Sr. denounced Mboya’sproposed colorblind laws:

“How then can we say that we are going to be indiscriminate in rectifying these imbalances? … The paper talks of fear of retarding growth if nationalization or purchases of these enterprises are made for Africans. But for whom do we want to grow? Is this the African who owns his country? If he does, then why should he not control the economic means of growth in this country? It is mainly in this country one finds almost everything owned by non-indigenous populace. The government must do something about this and soon.”

Yes, sir!

Obama Sr. didn’t seem to favor Marxist outcomes for the sake of Marxism , but because government control of the economy was most convenient for taking power and wealth from white and Asian businesses and giving it to blacks , especially to blacks of Obama Sr.’s tiny class of foreign-educated intellectuals. Thus, it might be more accurate to describe Obama Sr.’s ideology as “racial socialism.” Like the more famous “national” variety of socialism , Obama Sr.’sversion of socialism is less interested in ideology than in Lenin’s old questions of Who? Whom?

The apotheosis of this line of thought is seen today in Robert Mugabe’s economically desolate Zimbabwe.

In contrast to Obama Jr.’s intentionally occluded prose style , the confident tone of Obama Sr.’s 1965 paper is that of a bright young man sure that his target, Mboya, who merely happens to be the second most powerful man in Kenya, will of course appreciate 5,400 words of constructive criticism. It’s touching that Obama Sr. had this much faith in his country to utter such open and precise criticisms of his government’s economic and racial programs. Obama Jr. has never shown that faith in Americans.

In 1983, Obama graduated from Columbia in New York City, with plans to become a black activis t. First, though, he’d work for a year in the private sector to save up. Like a spy behind enemy lines,” he takes a job with “a consulting house to multinationalcorporations.” But capitalist temptation looms:

… as the months passed, I felt the idea of becoming an organizer slipping away from me. The company promoted me to the position of financial writer. I had my own office, my own secretary, money in the bank. Sometimes, coming out of an interview with Japanese financiers or German bond traders, I would catch my reflection in theelevator doors—see myself in a suit and tie, a briefcase inmy hand—and for a split second I would imagine myself as a captain of industry, barking out orders, closing the deal, before I remembered who it was that I had told myself I wanted to be and felt pangs of guilt for my lack of resolve.” [p. 136]

In reality, even though Wall Street was booming when Obama graduated in 1983, he wound up in a job much crummier than he makes it sound in Dreams. He was actually a copy editor at a scruffy, low-paying newsletter shop, Business International. One of his co-workers, Dan Armstrong , blogged in 2005:

I’m a big fan of Barack Obama … But after reading hisautobiography, I have to say that Barack engages in some serious exaggeration when he describes a job that he held in the mid-1980s. I know because I sat down the hall from him, in the same department, and worked closely with his boss. I can’t say I was particularly close to Barack—he was reserved and distant towards all of his co-workers—but I was probably as close to him as anyone. I certainly know what he did there, and it bears only a loose resemblance to what he wrote in his book…..”

Armstrong, the former co-worker, went on to make a brilliant point about Obama’s autobiography that has eluded almost all professional pundits:

All of Barack’s embellishment serves a larger narrative purpose: to retell the story of the Christ’s temptation . The young, idealistic, would-be community organizer gets a nice suit, joins a consulting house, starts hanging out with investment bankers, and barely escapes moving into the big mansion with the white folks. Luckily, an angel calls, awakens his conscience, and helps him choose instead to fight for the people.”

Why did Obama feel “like a spy behind enemy lines” in his corporate job?

You have to understand the leftism inculcated in him by his mother. In Chicago , a few years later, Obama tries to work out why the blacks in the Altgeld Village housing project seem so much poorer morally than the economically poorer people he had known in Indonesia . Obama’s conclusion in 1995 was straight out of his mother’s playbook: global capitalism hadn’t chewed the Indonesians up and spat them out … yet. To demonstrate the influence of his mother’s economics on his thinking, I’ll have to quote another sizable slab of Obama’s prose, engineered as usual to resist being quoted:

I tried to imagine the Indonesian workers who were now making their way to the sorts of factories that had once sat along the banks of the Calumet River, joining the ranks of wage labor to assemble the radios and sneakers that sold on Michigan Avenue. I imagined those same Indonesian workers ten, twenty years from now, when their factories would have closed down, a consequence of new technology or lower wages in some other part of the globe. And then the bitter discovery that their markets have vanished; that they no longer remember how toweave their own baskets or carve their own furniture or grow their own food; that even if they remember such craft, the forests that gave them wood are now owned by timber interests … The very existence of the factories, the timber interests, the plastics manufacturer, will have rendered their culture obsolete; … Some of them would prosper in this new order. Some would move to America. And the others, the millions left behind in Djakarta, or Lagos, or the West Bank, they would settle into their own Altgeld Gardens, into a deeper despair.” [pp. 183-184]

On the campaign trail, Obama’s more plain-spoken wife, Michelle, made clear the Obamas’ anti-business attitudes:

We left corporate America, which is a lot of what we are asking young people to do. Don’t go into corporate America. You know, become teachers, work for the community , be a social worker, be a nurse …. move out of the money-making industry, into the helping industry.”

In Chicago, Obama was an interested observer of black separatists’ calls for black capitalism.

On p. 200 of Dreams, Obama concedes the morality of the black nationalist case … in theory:

If [black] nationalism could create a strong and effective insularity, deliver on its promise of self-respect, then the hurt it might cause well-meaning whites , or the innerturmoil it caused people like me, would be of littleconsequence.” [p. 200]

Fortunately for the biracial and white-raised Obama and his ambitions for a career as a black leader , black separatism turns out to be a non-starter, economically and politically:

If nationalism could deliver. As it turned out, questions ofeffectiveness, and not sentiment, caused most of my quarrels with Rafiq.” [p. 200]

Obama dispassionately rejects Black Nationalism as impractical.

In the 1980s, Obama studies Black Muslim leader Louis Farrakhan’snewspaper (just as in 1995 he flew to Washington to attend Farrakhan’s Million Man March); over time, he notices that Farrakhan’s Black Capitalist strategy isn’t working.

Initially, The Final Call is full of

… promotions for a line of toiletries—toothpaste and the like—that the Nation had launched under the brand name POWER, part of a strategy to encourage blacks to keep their money within their own community . After a time, the ads for POWER products grew less prominent in The Final Call ; it seems that many who enjoyed Minister Farrakhan‘s speeches continued to brush their teeth with Crest.” [p. 201]

Obama has some fun imagining the frustrations of POWER’s product manager in trying to make and market a blacks -only toothpaste :“And what of the likelihood that the cheapest supplier of whatever it was that went into making toothpaste was a white man?”

The basic social problem that both Farrakhan and Obama want toalleviate is that, on average, blacks have less money than whites . Farrakhan’s plan to create a separate black-only capitalist economy in which blacks could not be cheated by whites out of the hard-earnedwealth they would create is doubtful on various grounds. And even if it were plausible, it would require generations of hard work in dreary fields such as toothpaste -manufacturing.

In contrast, Obama’s plan to get more money for blacks from whites by further enlarging the already enormous welfare / social work /leftist charity / government / industrial complex is both more feasible in the short run, and, personally, more fun for someone of Obama’s tastes than making toothpaste would be . Obama’s chosen path involves organizing rallies, holding meetings, writing books, attending fundraising galas, giving orations, and winning elections. In these endeavors, insulting whites in the Black Muslim manner is counter-productive, because whites will have to pay most of the bills.

(This raises a question that never really seems to come up in Dreams. Would blacks getting a bigger slice of the pie through more effective political leadership be bad for whites ? Obama vaguely gestures a few times in the direction of his dreams from his father being somehow also good for whites, but it’s usually in a character-building, time-to-cut-your-cholesterol way.)

In sharp contrast to the financial failure of Farrakhan’s black capitalism, Obama followed a path of multicultural leftism lavishly funded bywhites . In 1995, he was appointed chairman of the board of the Chicago Annenberg Challenge. Dreamed up in part by unrepentant leftwing terrorist William Ayers, the CAC gave away $50 million or so of Walter Annenberg’s arch-Republican money to “community organizations” in the name of improving public schools. It didn’t doanything for student test scores, but all those handouts made Obama a glamorous brand name among his political base: social workers and activists.

The climax of Dreams from My Father is Obama’s first trip to Kenya in 1988, between his community organizing gig and Harvard Law School. The trip got off to an angry start, what with all the whitepeople he kept running into.

Initially, he stopped off for his three-week tour of the wonders of Europe that left him psychologically devastated:

And by the end of the first week or so, I realized that I’d made a mistake. It wasn’t that Europe wasn’t beautiful; everything was just as I’d imagined it. It just wasn’t mine.” [pp. 301-302]

Upon arrival, Obama tours Nairobi with his half-sister Auma . At the restaurant of the ritzy New Stanley Hotel, Obama experiences the same outrage as his father had 23 years before, when he complained in his anti-Mboya article, “when one goes to a good restaurant he mostly finds Asians and Europeans …” The son is annoyed that Kenya’s best restaurants are infested with white tourists:

They were everywhere—Germans, Japanese , British , Americans … In Hawaii , when we were still kids, my friends and I had laughed at tourists like these, with their sunburns and their pale, skinny legs, basking in the glow of our obvious superiority. Here in Africa, though, thetourists didn’t seem so funny. I felt them as anencroachment, somehow; I found their innocence vaguelyinsulting. It occurred to me that in their utter lack of self-consciousness, they were expressing a freedom thatneither Auma nor I could ever experience, a bedrock confidence in their own parochialism, a confidence reserved for those born into imperial cultures.” [p. 312]

Obama and his sister are outraged when the black waiter gives quicker service to the white Americans sitting nearby. Auma complains:

“That’s why Kenya , no matter what its GNP, no matter how many things you can buy here, the rest of Africa laughs. It’s the whore of Africa, Barack. It opens its legs to anyone who can pay.”

Obama reflects on his half-sister’s outburst:

I suspected she was right … Did our waiter know that black rule had come? Did it mean anything to him? Maybe once, I thought to myself. He would be old enough to remember independence, the shouts of “Uhuru!” and the raising of new flags. But such memories may seem almostfantastic to him now, distant and naive. He’s learned thatthe same people who controlled the land before independence still control the same land … And if you say to him that he’s serving the interests of neocolonialism or some other such thing, he will reply that yes, he will serve if that is what’s required. It is the lucky ones who serve; the unlucky ones drift into the murky tide of hustles and odd jobs; many will drown.” [pp. 314-315]

Mugabe couldn’t have put it better himself.

One subtle but telling difference between the views of Obama Sr. and Obama Jr. is that Asians play a realistically large role in the father’s feelings of envy. In contrast, the younger Obama’s ressentiment is simplistically black and white. In Dreams’ conceptual framework, there are only three races: Black, White, and Miscellaneous. Despite all the years Obama spends in Indonesia and in heavily Asian Hawaii , Asians just don’t play much of a role in Obama’s turbulent emotions. He doesn’t take Asians personally, whereas everything about blacks and whites prods his most sensitive sores.

His half-sister Auma, on the other hand, has inherited Barack Sr.’stouchiness about Asians. She is incensed by both Nairobi ‘s prosperous white tourists and its prosperous Indian shopkeeper s:

“’You see how arrogant they are?’ she had whispered as we watched a young Indian woman order her black clerks to and fro. ‘They call themselves Kenyans, but they want nothing to do with us. As soon as they make their money, they send it off to London or Bombay. ‘” [p. 347]

While Obama Jr. agreed with Auma ‘s diatribe against whites , he lectures her on her anti-Indian feelings:

“Her attitude had touched a nerve.’How can you blame Asians for sending their money out of the country,’ I had asked her, ‘after what happened in Uganda ?’ I had gone on to tell her about the close Indian and Pakistani friends I had back in the States, friends who had supported black causes ….” [p. 347]

He thinks about it further and decides that blacks and Asians are all just victims of The [White] Man behind the curtain:

“Here, persons of Indian extraction were like the Chinese in Indonesia , the Koreans in the South Side of Chicago , outsiders who knew how to trade and kept to themselves, working the margins of a racial caste system, more visible and so more vulnerable to resentment. “ [p. 348]

Obama later learns that his half-sister Auma, who teaches German at the university, is trying to make something of herself, but her efforts to conserve her time and money for future investments elicit from her African kin

“… looks of unspoken hurt, barely distinguishable from resentment … Her restlessness, her independence, her constant willingness to project into the future—all of this struck the family as unnatural somehow. Unnatural…and un-African. It was the same dilemma … that certain children in Altgeld might suffer if they took too much pleasure in doing their schoolwork … “ [p. 330]

For Obama, conveniently enough, there’s always one solution to any of the basic human conundrums: political power for his racial group.

“Without power for the group, a group larger, even, than an extended family, our success always threatened to leave others behind.” [p. 330]

All this is not to say that Obama hasn’t changed his attitude toward economics (or race) since he published his autobiography in 1995.

Perhaps he has. In 2000, his dream of eventually winning the most powerful office in America plausibly attainable by a black leader quablack leader—Mayor of Chicago—was crushed when black voters rejected Obama in his primary challenge to Rep. Bobby Rush, a former Black Panther. Obama just wasn’t black enough to beat a more authentic black for the hearts of black voters. When he recovered psychologically after a year of mourning, he restyled himself as a blackcandidate who appeals to whites.

Maybe, deep down, Obama has changed his mind. Nobody, however, seems to have asked him.

In his 2004 Preface to the reissue of Dreams, the older Obama himself denies that he has gained much wisdom in subsequent years:

“I cannot honestly say, however, that the voice in this book is not mine—that I would tell the story much differently today than I did ten years ago, even if certain passages have proven to be inconvenient politically, the grist for pundit commentary and opposition research. “ [p.ix]

This is a bad outlook for the American economy.

My reader’s guide to the President’s autobiography, America’s Half-Blood Prince: Barack Obama’s “Story of Race and Inheritance” is now on sale.

[Steve iler (email him) is movie critic for The American Conservative.

His website features his daily blog. His new book, AMERICA'S HALF-BLOOD PRINCE: BARACK OBAMA'S "STORY OF RACE AND INHERITANCE", is available here.]

(Republished from VDare by permission of author or representative)
• Category: Economics • Tags: Wall Street 
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With financial markets suddenly crashing, the timeliest book of 2008 has turned out to be published in 2007: The Black Swan: The Impact of the Highly Improbable, anexuberant attack on the very concept of forecasting the future by a Wall Street trader-turned-philosopher named Nassim Nicholas Taleb.

Taleb’s book is proving highly influential. His popular but confusing buzz phrase, “black swan”, is seemingly already ensconced permanently in our jargon.

For example, Joe Nocera’s article in Saturday’s New York TimesMagazine, RiskMismanagement,” [January 2, 2009] does a fine job of applying Taleb’s insights to how Wall Street catastrophically underestimated the riskiness of securitized junk mortgages during the Housing Bubble.The financial industry assumed that the performance of financial instruments is distributed according to a bell curve, with few outliers. They assumed that mortgage defaults happen randomly due to miscellaneous human tragedies (illness, death, divorce, and job loss), so bundling a lot of mortgages together would virtually eliminate the risk of the entire package.

But instead, of course, the new populations of California, Nevada, Arizona, and Florida proved unable to earn enough money to afford their mortgages.

Taleb argues that bell curve-based forecasts fail frequently because outliers—“black swans”—have dramatic impact. If the bell curve actually applied to wealth, for instance, Bill Gates couldn’t exist.

Or consider history. Taleb, who is from the affluent Christian upper class of Lebanon (his grandfather was deputy prime minister), saw his homeland devastated when a 15-year-long civil war broke out while he was a teenager. For anyone who remembers the post World War II era, when Lebanon was universally viewed as the Switzerland of theMiddle East, that was a black swan indeed.

Similarly, who, say, could have predicted in 1924 that a failed artist then moldering in jail would go on to such a cataclysmic career that even 85 years later in 2009 the world remained structured around thegeopolitical and intellectual arrangements forged in his defeat? A Hitler couldn’t exist in a world wholly framed by the bell curve.

Taleb’s conclusion: human beings think too much in terms of normal probability distributions—of means and standard deviations—and not enough about the Hitlers and Bill Gates of the world.

Oh yeah? Obviously, Taleb has spent much of his life hanging around with a rather unrepresentative slice of humanity—Wall Street quant jocks.

Do we really not think about Hitler enough? For instance, there were at least five (5) Hollywood movies released in the last couple ofmonths to qualify for the Academy Awards that were set in Nazi-controlled Europe (Valkyrie, The Reader, Defiance, Good, and The Boy in the Striped Pajamas.)

Moreover, in recent years we’ve heard various Middle Easternpoliticians compared to Hitler, such as Hassan Nasrallah of Hezbollah in Taleb’s Lebanon, Mahmoud Ahmadinejad of Iran, and, most disastrously, Saddam Hussein.

Of course, as it turned out, Saddam didn’t particularly want to conquer the world. And even if he did, he didn’t have the human capital do it: he was ruling Iraqis (average IQ of 87), not Germans.

Unfortunately, as its correct but limited lessons get overgeneralized in the elite mind , The Black Swan is likely to wind up doing similar damageto intellectual life over the next few years. After all, there’s always a big market for attacks on bell curves. And Taleb’s ideas will inevitably get misapplied outside of Wall Street to public policy, where they will be used to buttress the conventional wisdom.

For example, in the new bestseller Outliers: The Story of Success,

which I reviewed in last month, the always-trendy Malcolm Gladwell attempts to apply Talebian-style anti-bell curve thinking to the perennial question of why ethnicgroups perform so differently on average. (Here’s Gladwell’s 2002 article on Taleb’s money management business, BlowingUp.”)

Taleb isn’t to blame for Gladwell getting befuddled. But his inability to fully understand why he’s right about the things he’s right about doesn’t help matters.

Still, if you can put up with Taleb’s egomania and free-floating hostility, which I find amusing but you might not, The Black Swan is almost as easy to read as Gladwell’s book, and far more valuable.

Taleb’s term for rare but important events, “black swans,” (which, in a display of his sometimes-excessive erudition, he borrowed from John Stuart Mill paraphrasing David Hume) is disastrously mischosen.Black swans aren’t rare at all, much less particularly important. In Australia, all wild swans are black, and there are as many as a half million of them. Even in the rest of the world, they have become a bit of a cliché of ornamental water gardens—there are a pair of black swans paddling about in a fake stream outside a dowdy restaurant a mile from my house.

Instead of calling his book “The Black Swan,” Taleb, had he wanted to stay with his the white-black theme, could have used as a title a more self-explanatory term such as The Black Albino“. White-skinned blacks are indeed rare, yet rather more common than you might assume.

Of course, nobody (except maybe the VDARE Foundation) would have published it with that title. Still, an all-around better title for his bookwould have been Outliers—which would have had the auxiliary benefit of preventing Gladwell from misusing it.

Needless to say, Taleb is right than making an accurate forecast is difficult, especially about the future.

But here are many phenomena in life where the glass is both half-full and half-empty. The secret is knowing when it’s one or the other.

Taleb is smart enough to admit on about 5 percent of his pages that making predictions using bell curves is a half-full glass. But he’s cocksure enough in the other 95 percent in denouncing its half-emptiness that careless readers likely will take away the lesson that it’s completely empty.

In fact, there’s a general pattern here that Taleb misses. The things we are most likely to argue the longest over, such as whether bell curves are useful or not or over nature vs. nurture, are those where the evidence is most abundant for both sides.

For example, Taleb draws a helpful distinction between probability distributions in “Mediocristan”, where datapoints tend to be distributed roughly according to bell curves (he lists 11 examples including height, weight, car accidents, and IQ) and in “Extremistan”where a small number of rare items greatly influence the average (he lists 21 examples, such as wealth, income, and book sales per author).

Taleb then asserts: “The Extremistan list is much longer than the [Mediocristan list].” Of course, he made up the lists

Is he right about which list is actually longer? Personally, I have no idea i.e. I have no more idea than Taleb does.

All I know for sure is that I have less self-confidence than Taleb. His experience as a Wall Streeter skews his view toward Extremistan. My experience as a marketing researcher showed me the pervasiveness of Mediocristan.

Consider the recent election. You will all recall how the countless election polls, with their bell curve-based “margins of error”, were humiliated on Election Day when the ultimate Black Swan was elected President—John McCain!

Oh, wait! That only happened in Talebstan. In the world in which you and I live, the pre-election polls proved to be extremely accurate.

Another only thing I know forsure: events in Extremistan are much more interesting thanevents in Mediocristan. Enron is much more interesting than Procter & Gamble. WWI and WWII are far more exciting than America and Canada not having a war.

We’ve all seen the “Dewey Defeats Truman” picture a million times. But the reason we’ve seen it is because it’s unusual. Contra Taleb,human beings love rarities.

But that doesn’t mean rarities are, as Taleb claims, more important.

We are most interested in things that are hard to predict, not necessarily those things that are most important. Science is in the business of making predictions, but the better it gets at predicting anything, the more boring those predictions become for us.

Indeed, much of what interests us has been carefully contrived by experts to seize our attention. It’s very hard to predict the winner of the Super Bowl because the NFL carefully rigs the system to make each team’s chances as equal as possible.

In contrast, if something becomes a sure thing, we get bored.

Thus, from 1934-1976, there was a prestigious summer exhibition football game at Soldier Field in Chicago pitting the previous year’s College All-Stars versus the reigning NFL champion team. Initially, as the famous rookies held their own against the champs, winning nine of the first 30 games, it was wildly popular. It drew over 100,000 peoplethree times in the 1940s. After 1963, however, as professional teams got more professional, the college boys never won again. Attendance drooped as the outcome became more predictable. In 1976, a thunderstorm stopped the game in the third quarter with the Pittsburgh Steelers up 24-0. Nobody saw any point in resuming the series.

By the same token, rare events and people are interesting because they are rare.

For example, every few years Hollywood makes a movie Based on a True Story about some Black Swan teacher who goes into a gritty slum school and unleashes the brilliant scholars within the minoritystudents. But they don’t make movies about the countless White Swan teachers who try equally hard and don’t succeed. Guess why not.

In fact, it’s actually easy to make accurate predictions about important phenomena. For example, I predict that public schools in gritty Compton CA will have lower average test scores than public schools in lovely San Marino, CA in 2009. And in 2010, and in 2011 and…

Well? Anybody care to bet against me?

I can make a 100 such predictions about significant topics with a 99 percent accuracy rate. But nobody would even bother reading all the way through the list. It would just get so boring and depressing, as I kept reiterating things that we all know but don’t want to talk about.

Let me, therefore, make some fun predictions.

  • I foresee that Oklahoma will win the college football national title game 35-31 when Florida quarterback Tim Tebow, having heroically driven his team 91 yards, throws a heartbreaking interception in the end zone on the last play.
  • In the week before the inauguration, the Obamas will begin secretly consulting about resolving problems in their marriage with Oprah Winfrey.

How do I know these things?

Well, obviously, I don’t. I just made them up. Indeed, to be frank, I chose Florida to lose because I couldn’t remember the name of the Oklahoma quarterback.

But aren’t these predictions more interesting than me yammering on about how school test scores won’t change?

How can we tell whether we are in Mediocristan or Extremistan?

Bell curves work best when individuals are of fairly equal importance. That’s definitely not true on Wall Street. But it is somewhat true in voting, public life, and, for many items, shopping.

A quarter of a century ago, I was running a test market in Eau Claire, Wisconsin for a Procter & Gamble deodorant brand. I was comparing two samples of 1250 households who were being shown different TV commercials over their cable television systems. I noticed a screwy pattern in our results. I eventually figured out that one household wasbuying 30 to 40 sticks of deodorant per month, affecting the market share for its entire sample. That’s Taleb’s definition of a Black Swan.

But did P&G pay us a bonus for discovering the Black Swan of the Deodorant Market—the Bill Gates of Perspiration Prevention?

Did P&G suddenly wake up to the fallacy of the bell curve and stop doing marketing research?

Nah. We all just agreed to drop that &%#$* outlier from the sample.

Surely, though, the world is dominated by outliers as Taleb says—not by boring stuff like deodorant?

Well, what about cars, which are in the news a lot these days, what with GM and Chrysler demanding a bailout? Is the world market for cars driven by a small number of Jay Lenos who buy hundreds of cars?

How about mortgages? Now we’re playing on Taleb’s own financial turf. Do houses tend more toward Bill Gates’s Extremistan or Joe Average’s Mediocristan?

Well, let’s look at Bill Gates’s house. He famously built one of the largest houses in America, 66,000 square feet. It’s almost 40 times larger than my house. And yet his net worth is, I would imagine, considerably more than 40 times my own.

(I can’t make a precise calculation because I haven’t beenmasochistic enough to open any letters from my 401k funds since last summer.)

And that turns out to be hugely important in understanding the mortgage meltdown, which has come straight out of Mediocristan. It wasn’t caused by a few giant defaults by Bill Gates, or even by Ed McMahon. It was caused by a huge number of defaults among people of average or below average wealth, typically working class folks in the second quartile up from the bottom.

And that followed, unsurprisingly, a decade and a half of government policy pushing easier credit for home buyers, especially for minorities. Both the Clinton and Bush Administrations wanted to boost the home ownership rate, which had been stuck at about 64 percent since the 1970s. Bush explicitly demanded the raising of black and Hispanichomeownership rates from about 50 percent to the white rate of 75 percent by such obviously risky ploys as zero down payments.

In other words, the marginal homeowners would primarily come from the financially marginal portions of the population.

The subprime fiasco wasn’t an impossible-to-predict Black Swan. It was the result of average humans following straightforward incentives to the best of their capabilities.

And they turned out to be distributed on bell curves.

Despite the Black Swan flap, bell curves still rule. We ignore them at our peril.

In fact, we just did.

[Steve Sailer (email him) is movie critic for The American Conservative. His features his daily blog. His new book, <st1:place

(Republished from VDare by permission of author or representative)
• Category: Economics • Tags: Wall Street 
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Steve Sailer
About Steve Sailer

Steve Sailer is a journalist, movie critic for Taki's Magazine, columnist, and founder of the Human Biodiversity discussion group for top scientists and public intellectuals.

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