Here's something for you Sarah Palin/Asif Zadari haters. The two met recently in New York and here's what happened:

On entering a room filled with several Pakistani officials this afternoon, Palin was immediately greeted by Sherry Rehman, the country's Information Minister.

"And how does one keep looking that good when one is that busy?," Rehman asked, drawing friendly laughter from the room when she complimented Palin.

"Oh, thank you," Palin said.

Pakistan's recently-elected president, Asif Ali Zardari, entered the room seconds later. Palin rose to shake his hand, saying she was “honored” to meet him.

Zardari then called her "gorgeous" and said: "Now I know why the whole of America is crazy about you."

"You are so nice," Palin said, smiling. "Thank you."

A handler from Zardari's entourage then told the two politicians to keep shaking hands for the cameras.

"If he's insisting, I might hug," Zardari said. Palin smiled politely.

I'm not going to even comment. I just think someone should make Zadari the admin of Sara Palin:VPILF group on facebook. He earned it. And what did Palin think of all this?

"It's going great," Palin said. "These meetings are very informative and helpful, and a lot of good people sharing appreciation for America." [link]

God Bless America. The whole thing is on youtube. I told you these Paks are horny.

Last month I tried to estimate how much of Sri Lankan youth go overseas for studies. I found this Island article which puts a number on that estimation:

Around 7,000 students go abroad for higher education annually but the Higher Education Ministry does not keep records or register students going abroad for higher studies privately, Ministry Secretary Mrs. P. B. G. Abeyratne said.

However, the Controller of Immigration and Emigration P. B. Abeykoon said there may be more than 7,000 who go abroad annually for studies but around 20,000 passports are issued purportedly for those leaving the country for higher education.

Higher Education Ministry sources attributed this large exodus of students to the inability of universities to admit all those who qualify at the AL examination. Parents who could afford to send their children abroad do so, source added. "This is a feature of the global scenario of this era."

Though university education is free, it can accommodate only a limited number of students. Currently, there are only 16 state universities and only about 16,000 students are admitted. [link]

7,000 seems like a conservative estimate, especially if the number of student visas issued are around 20,000. But even 7,000 per year is a big number, given that the state Universities can accommodate only around 16,000. There is absolutely no case for free higher education, more on that soon.

Because he says things like this :

There is a financial crisis in the U.S. and we are hearing the same old silly arguments. Apparently, in the last few weeks capitalism has collapsed, Bush has become a socialist and it's all the fault of the World Bank and the IMF. If you belive any of that, you should really update your feed reader.The above is based on slides (PDF here) from a talk Ajay delivered on the financial crisis. Obviously, it would have been better to hear the man speak along with the slides. 

In as early as 2003, someone had the wisdom to see what was coming. Who said the following?

One of the major government privileges granted to GSEs is a line of credit with the United States Treasury. According to some estimates, the line of credit may be worth over $2 billion. This explicit promise by the Treasury to bail out GSEs in times of economic difficulty helps the GSEs attract investors who are willing to settle for lower yields than they would demand in the absence of the subsidy. Thus, the line of credit distorts the allocation of capital. More importantly, the line of credit is a promise on behalf of the government to engage in a huge unconstitutional and immoral income transfer from working Americans to holders of GSE debt.

The connection between the GSEs and the government helps isolate the GSE management from market discipline. This isolation from market discipline is the root cause of the recent reports of mismanagement occurring at Fannie and Freddie. After all, if Fannie and Freddie were not underwritten by the federal government, investors would demand Fannie and Freddie provide assurance that they follow accepted management and accounting practices.

Ironically, by transferring the risk of a widespread mortgage default, the government increases the likelihood of a painful crash in the housing market. This is because the special privileges granted to Fannie and Freddie have distorted the housing market by allowing them to attract capital they could not attract under pure market conditions. As a result, capital is diverted from its most productive use into housing. This reduces the efficacy of the entire market and thus reduces the standard of living of all Americans.

Despite the long-term damage to the economy inflicted by the government's interference in the housing market, the government's policy of diverting capital to other uses creates a short-term boom in housing. Like all artificially-created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out.

Furthermore, the holders of the mortgage debt will also have a loss. These losses will be greater than they would have otherwise been had government policy not actively encouraged overinvestment in housing.

Perhaps the Federal Reserve can stave off the day of reckoning by purchasing GSE debt and pumping liquidity into the housing market, but this cannot hold off the inevitable drop in the housing market forever. In fact, postponing the necessary but painful market corrections will only deepen the inevitable fall. The more people invested in the market, the greater the effects across the economy when the bubble bursts.

Congress should act to remove taxpayer support from the housing GSEs before the bubble bursts and taxpayers are once again forced to bail out investors who were misled by foolish government interference in the market. I therefore hope this committee will soon stand up for American taxpayers and investors by acting on my Free Housing Market Enhancement Act.

The answer is Ron Paul in a speech he gave in September 2003. The pointer from the Mises Blog. Now most financial experts wouldn't have agreed with Paul then, and probably won't agree with him now. But the bottom line is the Austrian analysis is the only one which predicted what was coming.

In late 2005, Tyler Cowen, himself no Austrian, put a post on "If I was an Austrian post" on his influential Marginal Revolution blog. In it he made several predictions as to what would happen if he were to follow the Austrian business cycle theory. As Tyler later admitted, most of it has come true. He said however, loose monetary policy, like the Austrians thought was only one of several and less important triggers to the problem. Here Paul seems to suggest that apart from loose monetary policy, government guaranteed line of credit to Fannie and Freddie was at fault for creating the 'mal-investment' and the high risk-taking.

Whether you comepletly agree with the analysis or not, you have to hand it to Ron Paul, he called this one. That's why he's all over the media now.