DUCATI Vince from Liberty Guys suggests this one.

PAULA ABDUL You'd think she could afford her own manicurist by now. Why does she need to impose regulations on the mani/pedi industry? I've personally never had a problem with my manicurist -- very clean and reliable.

CHINESE RESERVES

A couple of months ago I suggested that China needs its reserves to, in effect, keep its banking system solvent. Here's an interesting hidden nugget from the San Fran Fed Bank:

The banking sector's biggest problem is asset quality--not surprising, given its historical relationship with state-owned enterprises. The official aggregate nonperforming loan ratio is now below 20%, but many analysts estimate that the true level exceeds 40%. To put the size of the problem in perspective, Standard & Poor's estimates that the full cost of writing off these loans could be $656 billion, or about 43% of forecasted 2004 GDP. Given the government's ownership, this has become a huge fiscal issue. Last January, the government recapitalized two of the healthier "Big 4" banks, China Construction Bank and Bank of China, injecting $22.5 billion into each institution and enabling them to write down bad loans; however, as I said, many have questioned the accuracy of reported asset quality improvement.

Just how much in reserves does China hold? $700 billion? But, Brad Setser advises: beware of currency mismatch (scroll through all the comments) between assets (foreign exchange reserves) and liabilities (remnibi bank deposits).Calling Cards

EVEN FLAT HOUSING PRICES will be disastrous? The point:

"The reality is, you do not need home prices to go down -- all you need is for housing prices to stop going up," said David Rosenberg, chief North American economist for Merrill Lynch. He calculates a flattening of housing prices could trim U.S. economic growth, currently running about 3.5 percent a year, by a full percentage point.

STEPHEN ROACH: The stock market bubble and property bubble are not isolated events. Fixed-income bubble:

Bubble after bubble has since percolated to the surface during this period of extraordinary monetary accommodation -- especially in a multitude of fixed income products (i.e., Treasuries, investment-grade corporates, high-yield bonds, emerging market debt, and a host of credit instruments). With overnight money basically free in real terms, the "carry trade" was a no-brainer -- investors and speculators alike could pocket the spread anywhere on the yield curve. This created an artificial demand for fixed income securities that was quick to take on bubble-like implications of its own.

http://www.morganstanley.com/GEFdata/digests/20050624-fri.html#anchor0

MUSIC AND WELFARE ECONOMICS From Tyler Cowen:

The welfare economics of music do not resemble those of bread or buttons. Right now we do not even know whether music is being oversupplied or undersupplied, relative to an optimum. Beware of any analysis of this case which does not consider these deeper underlying issues.

Yeah, whatever.

HERITAGE SUMMER INTERNS! They didn't have the dorms next to the building when I was there! I lived in Foggy Bottom. I spent the 4th of July that summer at Slick Willie's place on Pennsylvania Avenue. Nice fireworks display. The old Democratic women's crew passed out ice cream cones and Coca-Cola.

BEST SHOW ON TV: Entourage. Although I don't watch much else. Not only does the show goof on the ridiculous Hollywood life, it reminds me of a few people I know.

http://www.hbo.com/entourage/

A STEP BEHIND LJ: Boston, Las Vegas and Reno are the most-likely-to-bust housing markets. Didn't we already say that?

Even more interesting, developers are trying to slow the speculative tide (Why? Who knows...):

he lenders' caution coincides with some developers trying to cut down on speculative buying as well. For example, in Las Vegas, Arizona, California, and Florida, KB Home, one of the largest US home builders, is now inserting language into buyers' agreements that states the buyer must live in the home for one year and it must be their primary residence.

"There is a difference when someone comes in to buy and sell: They don't take care of the property the same way as a primary owner does," says Daniel Weidman, a spokesman.

In fact, Mr. Lyles the Starpointe developer, says he really dislikes it when multiple out-of-town buyers purchase one of his units and then lease it out to different people every weekend. "There is a new rock 'n' roll band every week that the permanent owners have to live with," he says.

Lyles says his firm can usually weed out investors during the qualification process. "If you look at their assets and they already own eight other condos, you know," he says.

Drug tests
Alcohol tests
http://www.csmonitor.com/2005/0512/p01s04-usec.html

WHAT I LOVE ABOUT INTERNATIONAL FINANCE TYPES: the world is always so confusing and mysterious. Here's a great example: "What's Causing The Trade Deficit?"

Ooh. Gee. I hope they get to the bottom of this one. Here's a hint: a bunch of people within certain political boundaries are purchasing goods and services from a bunch of people in another political territory.

http://www.danieldrezner.com/archives/002126.html

THE "OVERACCUMULATION OF CAPITAL"? Huh?

http://globblog.blogspot.com/2005/06/some-once-called-it-overaccumulation.html

OUR MONEY, OUR DEBT, OUR PROBLEM Setser and Roubini examine the US current account deficit. They are closer to the truth than most, but I'm still not buying the "kindness of strangers" argument.

HOW GOVERNMENT EVOLVES

Fascinating LA Times article on the arrest of a Mexican Mefia chief. His strategy? Quit the driveby shootings and impose taxation on drug dealers within your territory:

Authorities believe Ojeda, who could face life in prison, controlled the drug trade of Latino street gangs in Orange County by using violence and coercion to keep them in line, while forcing them to pay the Mexican Mafia a percentage of their profits. Through Santa Ana city jailers, Ojeda declined a Times request for an interview.

Sidenote: I still think several cities should be "kicked out" of Orange County. Santa Ana is one of them. house review

DUCATI If you have any insights on these, I'd like to hear from you. We are trying to enhance our enjoyment of Pacific Coast Highway.

ONE GREAT REASON TO WATCH CNN Erica Hill.

PORTER GOSS What is this guy thinking? Q: Hey, Porter, where is bin Laden? A: I have an excellent idea where he is. What's the next question? Q: Well if you know where he is, why not, you know, grab him? A: But when you go to the very difficult question of dealing with sanctuaries in sovereign states, you're dealing with a problem of our sense of international obligation, fair play.

Hey, Porter, have you heard of Afghanistan or Iraq? I guess what you meant to say is you can't invade sovereign states that have enough weapons to fire back, right?

ADVENTURES OF THE LIBERTARIAN JACKASS: RISKING YOUR LIFE (AGAIN), JUST FOR FUN On a gorgeous day here in Southern California, I decided to secure the iPod, press play on Beethoven's 9 and fall out of a perfectly good airplane. Actually, the airplane was not "perfectly good" so that's one reason to bail out. We could see all the way to Catalina (FYI: small island off the Coast of So Cal) during free fall. Absolute serenity.

Also, and not to say that I have anything to with this, but did you know jumpers take leaps off buildings in downtown LA during the night? Be sure not to mention to a jumper that your friend works in a building on South Fig (for building access purposes). Whip Guide

LEO TOLSTOY'S MESSAGE TO THE WORLD On Christianity, war and the State:

Before us are millions of armed men, ever more and more efficiently armed and trained for more and more rapid slaughter. We know that these millions of people have no wish to kill their fellows and for the most part do not even know why they are forced to do that repulsive work, and that they are weary of their position of subjection and compulsion; we know that the murders committed from time to time by these men are committed by order of the governments; and we know that the existence of the governments depends on the armies.

Can we then who desire the abolition of war, find nothing more conducive to our aim than to propose to the governments which exist only by the aid of armies and consequently by war - measures which would destroy war? Are we to propose to the governments that they should destroy themselves?

The governments will listen willingly to any speeches of that kind, knowing that such discussions will neither destroy war nor undermine their own power, but will only conceal yet more effectively what must be concealed if wars and armies and themselves in control of armies are to continue to exist.

'But', I shall be told, 'this is anarchism; people never have lived without governments and States, and therefore governments and States and military forces defending them are necessary for the existence of nations.'

But leaving aside the question of whether the life of Christian and other nations is possible without armies and wars to defend their governments and States, or even supposing it to be necessary for their welfare that they should slavishly submit to institutions called governments (consisting of people they do not personally know), and that it is necessary to yield up the produce of their labor to these institutions and fulfill all their demands - including the murder of their neighbors - granting them all that, there yet remains in our world an unsolved difficulty.

This difficulty lies in the impossibility of making the Christian faith (which those who form the governments profess with particular emphasis) accord with armies composed of Christians trained to slay. However much you may pervert the Christian teaching, however much you may hide its main principles, its fundamental teaching is the love of God and one's neighbor; of God - that is the highest perfection of virtue, and of one's neighbor - that is all men without distinction. And therefore it would seem inevitable that we must repudiate one of the two, either Christianity is love of God and one's neighbor, or the State with its armies and wars.

Perhaps Christianity may be obsolete, and when choosing between the two - Christianity and love of the State and murder - the people of our time will conclude that the existence of the State and murder is more important than Christianity, we must forgo Christianity and retain only what is important: the State and murder.

That may be so - at least people may think and feel so. But in that case they should say so! They should openly admit that people in our time have ceased to believe in what the collective wisdom of mankind has said, and what is said by the Law of God they profess: have ceased to believe in what is written indelibly on the heart of each man, and must now believe only in what is ordered by various people who by accident or birth have happened to become emperors and kings, or by various intrigues and elections have become presidents or members of senates and parliaments - even if those orders include murder. That is what they ought to say!
But it is impossible to say it; and yet one of these two things has to be said. If it is admitted that Christianity forbids murder, both armies and governments become impossible. And if it is admitted that government acknowledges the lawfulness of murder and denies Christianity, no one will wish to obey a government that exists merely by its power to kill. And besides, if murder is allowed in war it must be still more allowable when a people seek its rights in a revolution. And therefore the governments, being unable to say either one thing or the other, are anxious to hid from their subjects the necessity of solving the dilemma.

http://www.jesusradicals.com/library/tolstoy/last.html
Phone Cards

ECONOMIC SLOWDOWN STILL COMING And the percentage of household assets in real estate at an all-time high.

http://www.safehaven.com/article-3252.htm

TSUNAMI? Thanks for the phone calls, but I was out on the water tonight from 7pm until 8:30pm. Waves were horrible. No tsunami.

HIRING A MAID AND THE IMMIGRATION DEBATE In interviewing maid candidates (a process driven by referrals), I realize that choosing the best service at the best price may not result in the employment of a "legal" citizen. Is that a problem?

CINDERELLA MAN In terms of boxing epics, I'll take Cinderella Man over Raging Bull. Paul Giamatti is brilliant.

DEEP THROAT Great, overlooked meaning behind the Deep Throat hoopla: there's no such thing as The Government. Even parasites and thieves on the same team plot to sell each other out.

FREE KATIE HOLMES! Website aims at liberating Holmes from Tom Cruise. You know, I like Tom, but why didn't one of his handlers pose this question: Tom, why would a A-list superstar choose a C-List actress, best known for her role on Dawson's Creek?

http://www.freekatie.net/