Passage of the day....

"What is a political campaign save a concerted effort to turn out a set of politicians who are admittedly bad and put in a set who are thought to be better? The former assumption, I believe, is always sound; the latter is just as certainly false. For if experience teaches us anything at all it teaches us this: that a good politician, under democracy, is quite as unthinkable as an honest burglar. His very existence, indeed, is a standing subversion of the public good in every rational sense. He is not one who serves the common weal; he is simply one who preys upon the commonwealth. It is to the interest of all the rest of us to hold down his powers to an irreducible minimum and to reduce his compensation to nothing; it is to his interest to augment his powers at all hazards, and to make his compensation all the traffic will bear."
-HL Mencken-

The Best Advertisement for 2008.....

Contains nudity and is not work safe, making it worthwhile to see...

Link:

One of my favorite music pieces is Wagner's "Flight of the Valkyries" and its soaring flights. I saw Wagner operas at the MET in the New York years ago. The music is so appropriate for this clip.

A Russian's Prediction....

A Russian researcher has been going about prophesying that the US will destabilize and breakup in 2010 due to a civil war. I can understand his thoughts about a civil war, since I think that this will be a necessity in order to get back to the 'true' America where opportunity meets hard work to create wealth unlike today's leftist handout mentality that infects many people in the US.

But the silliness of the map above just tells a story that this guy does not understand the US. First, I see that Tennessee and South Carolina splits off with the ultra-liberal Northeast and aligns itself with Europe. This is pure silliness since people from these states in the South would never team up with the Godless liberals of the Northeast an align themselves with nihilist Europeans.

Government Promises the Easy Way out....

Governments cannot create but merely redirect. When the government spends, the money has to come from somewhere. If the government doesn't have a surplus, then it must come from taxes. If taxes don't go up, then it must come from increased borrowing. If lenders won't lend, then it must come from the printing press, which is where all these bailouts are headed. But each additional dollar printed diminishes the value of those already in circulation. Something cannot be effortlessly created from nothing.

Similarly, any jobs or other economic activity created by public-sector expansion merely comes at the expense of jobs lost in the private sector. And if the government chooses to save inefficient jobs in select private industries, more efficient jobs will be lost in others. As more factors of production come under government control, the more inefficient our entire economy becomes. Inefficiency lowers productivity, stifles competitiveness and lowers living standards.

All of it here. Some people will whine that there was a failure in the market. That Capitalism does not work. that it hasn't delivered what it promises. so what has capitalism promised? That everyone gets what they think that they should be delivered without earning it? that everyone should get one type of economic good that someone thinks that is essential to life? There has been no failure in the market. GM should declare bankruptcy, idiotic healthcare plans need to be abrogated and people that work in these industries must face the music that they were complicit in creating. Its just real life people.

The market is telling all of us we no longer can live the way that we did before. Bu this is not a failure in the market, its the market adjusting to decades of bad behavior. A few days ago, I chatted with an economist from the World Bank. He kept talking about about market failures. Like, for example, the failure of the market to deliver healthcare services to millions of Americans. Of course 100% of his focus was on the demand side of the equation and zero attention paid to the supply. 30 million new customers with, lets say 2,500 patients per doctor, leads to new demand for 12,000 new doctors. This is addition to the estimated shortfall of about 35,000 GP practitioners that currently are needed. He figures that if funds are magically created to pay for these people, that mystically there will be some fairy that provides these services to people. But in reality, there are severe shortages of supply of simple healthcare services since there are few that want to deliver service at the prices that governments pay for these things. Many people go without healthcare today not due to ability to pay but to a complete lack of supply.

So, here we have a trained economist, working for a major multilateral financial institution that is not looking at a problem with is eyes open. Golly gee, this would never be the case with the golden calf idol in Washington would it? Of course not, the Obamessiah with his golden Negro capacity would be able to determine exactly how to create the resources perfectly by balancing supply and demand so that everyone is perfectly met with what they need at a price that they can pay. Its amazing.

How To Fight the Obamessiah's Newdeal?

Why even bother fooling around with talking sense against complete nonsense? This is what I suggest:

1. Ignore paying any taxes. Neither pay nor sign anything. Paying taxes to the heroin addicted US government will do nothing.
2. Wait, buy ammunition an get ready for the inevitable civil war. Also, do not hesitate to pull the trigger when even the slightest issue gets raised with anyone. Remember, if you are scared then violence is completely justified according to my communist family members that feel one is justified with violence if scared.
3. Americans are now nothing better than weak kneed yellow bellied Europeans. So who cares what happens to these nihilistic self centered buffoons?

Tired of being an American? Like a Muslim, you born as one, a person cannot quit. It will cost you a fortune just like apostasy costs you your life in Islam. What kind of country cannot tolerate people quitting being one of them. Its the US where taxes that every Liberal thinks that they are due to distribute to their favored constituency cannot allow people to start leaving the sinking socialist ship.

So take aim, and be willing to pull the trigger when things get a little tough.

5 Years of Trouble With the Mullet in China....

After 5 years of aggressive interdiction against the Mullet, there still appears to be those that have evaded the crackdown....

China blasts US over mullet epidemic
By John Hosterman
BEIJING - As the world heaps criticism on China for its lack of aggressiveness and transparency in dealing with its outbreak of severe acute respiratory syndrome (SARS), many Chinese officials have expressed anger and concern over another outbreak that has swept through China and perhaps elsewhere in Asia.

Addressing a gathering of journalists in Beijing on Friday, Wu Yi, deputy prime minister and new health minister, demanded that the United States be more proactive in dealing with the all-American "squirrel pelt" hairdo, also known as the "mullet". The growing popularity of the mullet, which is characterized by short hair on the top and sides of the head and a long drape of hair at the back, poses a grave threat to China's sovereignty, said Wu. Despite recent offers from President Bush for US assistance in dealing with its domestic SARS epidemic, Wu blasted US leaders and the foreign press for applying a double standard in dealing with international health issues.

"Those hypocritical bastards say we didn't do enough in February to contain the spread of SARS, but they've let those 'ape drapes' get out of hand domestically for years, and now China's paying the price for it," she said. "If they had just put [Hollywood actor] Kevin Bacon under quarantine back in the '80s, this would not be an issue today." Bacon, star of numerous popular films in the 1980s, is widely acknowledged as a "super-spreader" of the mullet.

Known in China as the ayishushu or "uncle auntie" haircut, the mullet is raging unabated throughout the country, whose beauty parlors and barber shops are often ill-equipped to cope with the abomination. Wu said 578 mullet cases had been diagnosed in Beijing alone, with cases increasing 36 percent from March to April. It is feared that rural areas in the world's most populous country could be severely affected by the spread of the mullet, but no statistics have been provided by the Health Ministry. The ministry has been forced to implement extreme measures to contain the hairdo, placing victims under quarantine, subjecting them to summary shaves and forcing them to compose letters of self-criticism. Wu flatly denied claims made in a May 23 Washington Post story that the ministry had been secretly selling the harvested mullets to buyers in an unspecified US state. "That's absolutely absurd," said the livid Wu, "I don't even know where Indiana is."

Officials quietly pulled popular television broadcasts of professional wrestling and said mandatory "hairstyle declarations" would be in place at all international airports in the country by May 15.

On Thursday, Premier Wen Jiabao called an emergency meeting of the State Council, China's cabinet, to discuss administrative measures in dealing with the crisis. The council outlined a four-point strategy for mullet eradication and rubber-stamped an official slogan to mobilize the masses behind the campaign. Bright-red banners were visible in parks and on public buildings throughout the country, eclipsing the ubiquitous light-blue SARS posters. English banners have appeared, in an apparent attempt to warn China's growing foreign population against attacks on China's coiffure sovereignty. One such banner declared: "Up with China, down with hicks, Mao and mullets do not mix!"

Wen will also travel to Bangkok next week for strategic discussions with Thai Prime Minister Thaksin Shinawatra. The recently announced meeting comes in the wake of a mullet sighting outside an A&W Root Beer stand in downtown Bangkok's Siam Square, which has prompted fears that the outbreak has grown into a regional issue. Unverified reports of mullet sightings have also come from Japan and the Philippines. Although Chinese Health Ministry officials have yet to determine the origin of the outbreak, some health professionals have noted the wide availability of the mulleted American country singer Billy Ray Cyrus's albums on China's black market.

Newly appointed Chinese President Hu Jintao, in the western municipality of Chongqing to attend a state-sponsored monster-truck rally, said he officially shared Health Minister Wu's position on the crisis. However, Hu, sporting a bold new haircut, was also quoted as saying he thought Wu should "chill out just a little bit, especially with the Kevin Bacon stuff".

"I mean, I'm not a big fan of the 'Kentucky waterfall' [another name for the mullet] either, but there are definitely times when you just gotta cut footloose," he said before taking another swig off of a Pabst Blue Ribbon beer.

http://www.atimes.com/atimes/China/EE03Ad01.html

The Function of a Bubble.....

There has probably been asset bubbles as long as there have been people. It is human nature to try to benefit from various opportunities and sometimes over extend themselves that eventually cause a collapse in the price of these things. What happens in a bubble is that the price of an asset rises well above its real productive value and reaches prices on emotion and not rationality.

So, many rue the the collapse in housing. despite this having been a government mandated bubble, it is a bubble all the same. Prices of housing rose way above its real productive value and we can argue that housing can only rise to a price that can be supported by the income that the people produce in the region. Since real estate cannot be transported it is fundamentally regional in nature and limited in price to a regional economy. What we have observed is that during the bubble, prices rose way above what could be reasonably supported. Since the US Government promoted home ownership through various programs and supports, such as interest tax benefits for mortgages leading to higher prices and greater leverage, loosening of credit standards for mortgage lending forced upon banks, the creation of Federally chartered mortgage guarantee and lending organizations Fannie Mae and Freddie Mac that were required to hold greater and greater portfolios of risky loans, the mandated support of Sub-prime and Alt-A substandard mortgage lending under the guise of support for disadvantaged minorities and a host of other misguided supports and schemes, people reacted rationally within the environment that the government created.

So, now, post-bubble, there is a greater supply of housing at a higher price than can be absorbed given the economy and regional factors. So what will happen? PRICES WILL FALL and probably dramatically. In many cases, prices will actually fall well below the value that would be determined in a normal market. Some people will be in a position to take advantage of that and they are the lucky ones.

But, its important to recognize that bubbles are both human nature and part of capitalism as markets determine market clearing prices for everything. Human nature and a humans self interest can never be eliminated since this is part of what we are.

As written by 'evil' Wall Streeter Henry Blodget, a 1990's era internet-tech analyst writes....

First, bubbles are to free-market capitalism as hurricanes are to weather: regular, natural, and unavoidable. They have happened since the dawn of economic history, and they’ll keep happening for as long as humans walk the Earth, no matter how we try to stop them. We can’t legislate away the business cycle, just as we can’t eliminate the self-interest that makes the whole capitalist system work. We would do ourselves a favor if we stopped pretending we can.

Second, bubbles and their aftermaths aren’t all bad: the tech and Internet bubble, for example, helped fund the development of a global medium that will eventually be as central to society as electricity. Likewise, the latest bust will almost certainly lead to a smaller, poorer financial industry, meaning that many talented workers will go instead into other careers—that’s probably a healthy rebalancing for the economy as a whole. The current bust will also lead to at least some regulatory improvements that endure; the carnage of 1933, for example, gave rise to many of our securities laws and to the SEC, without which this bust would have been worse.

Lastly, we who have had the misfortune of learning firsthand from this experience—and in a bust this big, that group includes just about everyone—can take pains to make sure that we, personally, never make similar mistakes again. Specifically, we can save more, spend less, diversify our investments, and avoid buying things we can’t afford. Most of all, a few decades down the road, we can raise an eyebrow when our children explain that we really should get in on the new new new thing because, yes, it’s different this time.

So, what I think will be the result of all of this? I think:

1. People will save more and consume less. Household consumption as a percent of GDP has risen from 60% to 70% over the past 25 years-or-so and it appears as if we a going to quickly return to more savings and less consumption.
2. Housing prices will fall relative to everything else. People will spend less for housing than they have in the past as it now has to make rational sense relative to regional GDP. Housing will be plentiful and more affordable than we will ever to be able to remember.
3. Less costly housing will free up capital for investment in more productive areas of the economy. Housing absorbed a disproportionate amount of savings and this will flow back to the productive economy.
4. Financial engineering and Wall Street income relative to GDP will permanently fall. In other words, the fees that financial institutions gain from everyday transactions will decrease relative to the economy as a whole making it more productive.
5. Over-investment in assets during a bubble have positive benefits as these assets are moved towards more productive uses. The internet bubble created a foundation to fundamentally change how people live and work. We do our everyday activities much differently than we did before Al Gore invented the internet. This will also prove to be true as housing will not be the burden that it was in the past and productive in ways that we cannot imagine now.

Subprime Academic Piece....

The left leaning press is trying to lay blame on the mortgage crisis on 'unscrupulous' mortgage lenders. However, these 'unscrupulous' mortgage lenders were created through and supported by government policy where increased home ownership was the desired outcome. The whole piece here.....

The question that is being asked is the correct question: how did it come about that our financial system allowed such loans to be made, condoned such loans, and even celebrated such loans? The answers that are being given are not yet the correct ones, however. The main answer that is being given, that unscrupulous lenders were taking advantage of poorly informed borrowers, does not fit the evidence nor does it dig deep enough.

The “mortgage innovations” that are largely the federal government’s responsibility are almost completely ignored. These “innovations,” heralded as such by regulators, politicians, GSEs, and academics, are the true culprits responsible for the mortgage
meltdown. Without these innovations we would not have seen prime mortgages made with zero down payments, which is what happens when individuals use a second mortgage to cover the down payment of their first. Nor would we have seen “liar loans”
where the applicant was allowed to make up an income number, unless the applicant was putting up an enormous down payment, which was the perfectly
reasonable historical usage of no-doc loans (which require minimal financial documentation).

The political housing establishment, by which I mean the federal government and all the agencies involved with regulating housing and mortgages, is proud of its mortgage innovations because they increased home ownership. The housing establishment
refuses, however, to take the blame for the flip side of its focus on increasing home ownership— first, the bubble in home prices caused by lowering underwriting standards and then the bursting of the bubble with the almost catastrophic consequences to the economy as a whole and the financial difficulties being faced by some of the very homeowners the housing establishment claims to be trying to
benefit.

Subsidies and outright changes in the laws surrounding the granting of mortgages are largely to blame for the housing bubble that is brutally affecting housing and the overall economy.

As government policy leaned towards investment by consumers in housing instead of traditional savings, there was a greater than normal investment in housing relative to what would have occurred. This is now in full reversal mode as consumers will rapidly pay down debt and increase savings. This is actually a good long-term trend. However, government tax policy that favors consumption over investment and punishes and is hostile to those that earn and save, will create further distortions that will eventually have to be worked out.

The Obamessiah's grandiose plans to stimulate the economy may be a minor short-term positive but is an intermediate and longer-term huge negative. Essentially what a large stimulus plan does is to take resources from the general economy through borrowing and diverts these resources to the government's favored products and areas. But these diverted funds will decrease the productive investment that would have normally taken place without a stimulus plan. So, unless the government spending is more productive that the alternative spending would have been, the economy will actually perform below what it would have done without any stimulus plan at all.

One day we will all wake up and see what fools we have been to have worshiped the 'golden calf' and asked this idol to be a solution to all of our problems. We will hopefully realize that this idol has been the root of the problems to begin with.

Cheap Liberals.....

From the Liberal.....

This holiday season is a time to examine who’s been naughty and who’s been nice, but I’m unhappy with my findings. The problem is this: We liberals are personally stingy.

Liberals show tremendous compassion in pushing for generous government spending to help the neediest people at home and abroad. Yet when it comes to individual contributions to charitable causes, liberals are cheapskates.

Arthur Brooks, the author of a book on donors to charity, “Who Really Cares,” cites data that households headed by conservatives give 30 percent more to charity than households headed by liberals. A study by Google found an even greater disproportion: average annual contributions reported by conservatives were almost double those of liberals.

Golly gee. You really think so? What is different now than before? Absolutley nothing since Liberals have always been less generous with their own welth than others.

They are very generous when they are giving away your money, but not their own. Figures. Its all about making others behave the way that they want other to behave.

See, they are smart people that know what is better for you and know how much YOU should be giving to charity. In fact, do not give it charity, give it to the 'golden calf' since the 'golden calf' knows better what to do with it then you do. In fact, they know how much taxes you should pay to the 'golden calf' idol in Washington and this is the amount that you should have paid before those evil Bush tax cuts and what they will do with all of the additional funds that they will raise will do all the good in the world. This idol will take in all of the ill gotten gains made from you evil successful people and distribute it to all of the woefully needy people of this world. They know better who needs what and who is more deserving than you idiots do since they have singular knowledge about these things.

Furthermore, rarely does one meet a Liberal doing the hard work in such places like Africa. When I lived there, Conservatives probably outnumbered Liberals 5 to 1. Liberals, sipping their Chardonnay and content on voting in the 'boy king' as President are satisfied with creating their 'golden calf' idol in Washington and now can go on their way to having sex with others of their own gender and children and ensuring that everyone has access to as much pornography or abortions that they desire. Good days for Democrats these days.

When Washington Runs Wall Street.....

As per the WSJ today...

The new laws and regulations have neither prevented frauds nor instituted fairness. But they have managed to kill the creation of new public companies in the U.S., cripple the venture capital business, and damage entrepreneurship. According to the National Venture Capital Association, in all of 2008 there have been just six companies that have gone public. Compare that with 269 IPOs in 1999, 272 in 1996, and 365 in 1986.

Faced with crushing reporting costs if they go public, new companies are instead selling themselves to big, existing corporations. For the last four years it has seemed that every new business plan in Silicon Valley has ended with the statement "And then we sell to Google." The venture capital industry is now underwater, paying out less than it is taking in. Small potential shareholders are denied access to future gains. Power is being ever more centralized in big, established companies.

For all of this, we can first thank Sarbanes-Oxley. Cooked up in the wake of accounting scandals earlier this decade, it has essentially killed the creation of new public companies in America, hamstrung the NYSE and Nasdaq (while making the London Stock Exchange rich), and cost U.S. industry more than $200 billion by some estimates.

Again, Washington meddling may have reduced the potential for some problems but has also reduced the potential for doing traditional business. Washington crushes the ability to make money but I am sure that by worshiping the 'golden calf,' and his administration, that through the sheer force of his will, he will solve all of the problems that are facing America today. Screw all of these idol worshiping liberals. I figure that if one day, I find myself standing next to the Obamessiah, that I will do everyone a service by burying a knife deep into the middle of his chest and make him a human again. He will be the reverse Jesus, a God that becomes human.

Ronald Reagan Said......

Government is not a solution to our problem, government is the problem.

-Ronald Reagan-

The finger prints of government meddling in the economy are all over the current financial crisis. Where we will fail going forward, is that the people now expect the government to solve these problems that these clown created. The only way to solve the risks facing us today is to completely defund the government and remove all of these things from the portfolio of government involvement. Last year, the Federal Government spent over US$ 2.5 trillion of your money.


A federal government has 5 main responsibilities:

1. National defense
2. International diplomacy
3. A system of law
4. A monetary system
5. Protecting interstate commerce

The rest of government responsibilities are the portfolio of the States.

If anyone says that the States can't afford the balance of the responsibilities, then they should be shot. The Federal Government has squeezed States on their ability to fund through onerous taxes and have hamstrung State initiatives through massive unfunded mandates.

Time for a civil war.

The Always Interesting James Grant....

Here.

The SS.....

Its No Longer My Country.....

I no longer think nor believe that the United States is my country. I no longer feel a kinship to its people since I see them as a whining and pathetic people that think that they are somehow entitled to things purely due to the fact that they had the good fortune to be born on a certain piece of land. It seems as if being born there and not hard work or taking advantage of opportunity is the operative words for modern Americans. Its now, 'What are you going to give to me?'

I just cut and pasted this piece below from Herb London. Where I disagree with London is that I think that we had already lost our nation and it has had the cancer of liberalism for 70 years that began with the government intervention of Hoover/Roosevelt. It took 70 years to kill the patient, but now we have a nation of people that worship the golden calf in Washington and expect that this idol worshiping will somehow provide for them. Liberalism is a insidious disease and very destructive to people, communities and families. What we experienced this past November was just the death of the patient.

The results are in and my candidate lost the presidency. Since I love this country, I wish the newly named President Barack Obama every success. But this was an election unlike any other. I don't think the Republicans merely lost an election, I believe many of us lost a country.

This was a land that once rewarded hard work and enterprise. A place where one's word was his bond. America was the land of opportunity. If you can't do it here, you cannot do it anywhere. We were a people to be envied, not only because we had the highest standard living, but because we had the greatest degree of stability.

Americans were notoriously optimistic because we counted on tomorrow being better than yesterday. We were an open people dependent on fair play and a free market bounded by a standard of virtue. With all the blemishes in our past and breaches in our own ethics, we were a model of civic rectitude. "Dems that gives, gets;" those who wish to bilk the system will be discovered and isolated.

There was a time not so long ago when people did not depend on government to bail them out of financial difficulty, a time when the nanny state bred apprehension, not affection. Now, it seems, in the new America almost everyone wants a free ride. The non-tax payer wants a rebate from the taxpayer. The poor man wants everything the rich man has and he wants the rich man to give it to him.

Enemies of the nation, it turns out, are not enemies at all; we merely defined them as adversaries. Had we been clever in the past, we could have defined them out of existence. All we have to do is engage in "soft power," diplomacy and clever negotiating skill. Surely those who want to kill us will be persuaded that swords should be converted into plowshares. It's odd, but Osama bin Laden doesn't seem to embrace this position.

The America of now is one where Orwellian logic rules. Redistribution of wealth is fairness. Taxes are patriotic. The free market should be a regulated market. Big government is good for you. Politicians know what kind of health care is best for you. Choice should be limited, except when it comes to abortion. Power comes from being powerless. Progressive education is designed to promote progress toward socialism. Race doesn't count unless a person of color tells you it counts. Higher education gets lower each year. Those who create our problems should be asked to solve them. Religion should be a private matter that does not inform public morality. Liberal is radical. Free speech is selective speech. Courage is impetuousness.

Yes, Americans - many Americans - want change. The level of dissatisfaction runs deep. But the national cri de coeur hasn't a direction. That's what makes it so dangerous. Americans live better than at any moment in our collective history, notwithstanding the meltdown on Wall Street, yet despair is ubiquitous. Admittedly observing 401K accounts disappear as soap bubbles will make anyone angry. Nonetheless, it is a privilege to live in the land of the free, a privilege now regarded as an entitlement.

It was once wrong to use community groups such as ACORN to steal an election. It was once wrong to conceal one's past in order to invent an identity. It was once wrong to use the instrument of government finance to satisfy a constituency and then claim an unregulated market is what ails us. It was once wrong to lie in a campaign and still is except when the media panjandrums avert their gaze for the lies of a favored candidate.

Surely we face threats across the globe that cannot be easily forestalled. Arguably the most significant threat is from within in the form of an unregulated government, a government large, intrusive and seductive. This is the new American government that promises everything and demands very little from its citizens. "Shop until you drop" is the national anthem. After all, you don't have to fight if you don't want to and you don't have to sacrifice if that's too much for you. All you have to do is visit malls and keep opinions to yourself. Opinions are important since Truth Squads want to be sure you don't criticize the chosen candidate.

Where is my America, the place of fair play, individual rights, the rule of law and respect for private property? Was the past merely a dream from which I have awakened? Can that America of exceptionalism return? Can it find its way back into the public consciousness?

I have my doubts. Now the change agents scream "everything will be different." Alas, they are right. It appears as if everything will be different, most especially the end of an America I loved.

I think that the recently elected Messiah is the biggest phony to walk in-front of the American people and this will be evident to the American people shortly. I also was not too thrilled with the centrist John McCain but he was clearly more inline with my conservative views but far from what I desire. I think that American's worship of the golden calf in Washington will prove to be an incredible folly as almost everything that they expected and all of the handouts that they thought that they would be getting at the expense of some faceless other, will not be delivered.

I still believe in people and that deep down inside that people all around the planet know what is best for them. However, I do not foresee that people in the US will be able to get out of this entitlement mindset that has been the opiate that had kept people in line. Personally, I think that a civil war would do us some good. Sacrifice and difficult times is what brings out the best in the American people. And furthermore, violence, as it was explained to me by one of my neo-communist family members, is acceptable since people are scared. In this particular case, it was violence of liberals against conservatives that was justified but I think that the same would hold true the other way around. Why should I sit idly by while others seize the fruits of my labor for distribution to others? So, I am scared for the future of my children, so I will not hesitate to use violence to protect them and their future.

Bush is NEO......

Passage of the Day.....

Just a cut and paste....

In many ways Milton Friedman was a devil figure in my youth, in a Keynesian household of economists. I grew to see the issue as more nuanced as I was in school and ultimately have come to have enormous respect for Friedman's views on a range of questions. That's a respect that is born of the power of his arguments as one considers them more and more deeply. But it's a respect that's also born of the lessons of the experience of the success of decentralization in a place like Silicon Valley and of the failures of centralization in places like Central Europe and Russia.

In many ways some of the ideas of Hayek and Friedman about how markets best provide incentives, and best provide information, and best collect information may in a sense be even more true today, because of the changes that information technology is bringing, than they were at the time when they were propounded.

If you think about it, it cannot be an accident that it is the same 15-year period when communism fell, when command-and-control corporations like General Motors and IBM had to be drastically restructured, when planning ministries throughout the developing world were closed down, and when the Japanese model of industrial policy proved to be a complete failure.

There is something about this epoch in history that really puts a premium on incentives, on decentralization, on allowing small economic energy to bubble up rather than a more topdown, more directed approach, that may have been a more fruitful approach in earlier years.

~Lawrence J. Summers, 71st Secretary of the Treasury and Adviser to President-Elect Barack Obama

Centralized decision making rarely works. Its the hit-and-miss of markets that determine success and failure. Teh further that we push into government intervention in providing such services as savings for retirement and the financing and delivery of healthcare and the like, the less that these systems will be able to adjust to the realities of the world today and where it will be tomorrow. The interventions instituted by Herbert Hoover allowed Roosevelt to completely change what government was designed to achieve. We will now pay the price for that indulgence.

Emergency Funds for GM?

Bailing out banks is very bad. The problem with what has gone on the past few months is a textbook example of why governments should never be involved in business. The US government has regulated banks and targeted various sectors for investment, particularly housing, over the past several decades through these vehicles. Now that the government has been so involved, who can blame banks for behaving the way that they did since this is the environment that the government created for them. Now the taxpayer is on the hook for bailing out these firms that I think acted the way that one should act within the environment that the government created.

Also, its important to note, the Lehman did go bankrupt and Bear Stearns did too since all equity holders were effectively wiped out. But, banks are a different story, unfortunately. Without a banking system, a country doesn't have a economy. But an economy can exist with out specific industry.

The argument for a bailout of GM? I just cannot see it. GM can operate under debtor-in-possession financing (DIP) and the government can participate in that. See, what the government is proposing here is that they will lend these car companies money and then get to manage and direct how these organizations are going to operate. Who are they kidding? It will go from awful to excruciatingly awful.

The problem here is that car companies have 3 options to get the financing that they need:

1. From investors- that will just not happen. No one should have confidence in their abilities and with the government involvement, politics will drive decision making in the future and not good business sense.
2. From the government- money can be forthcoming from the government but this is just delaying the inevitable. I also think that these companies will only become pawns of policy and not real business organizations. The foreign car manufacturers will continue to gain market share since the big three will be making cars to please legislators and government officials and not consumers.
3. Bankruptcy- money is forthcoming in bankruptcy using something called DIP financing. A third party, in this case a judge, listens to the various stakeholders and moves these productive resources to those that he thinks can create the greatest value.

None of these 3 is optimal, but in my opinion, the most effective one and the most efficient one for the long-term for workers, for American taxpayers and for the longer-term health of the American economy is option 3, a bankruptcy. It will be the quickest way to move these assets to their most productive value.

More Evidence of Global Warming.......

No one can deny that humans have impacted the climate causing global warming. As a result of this warming, we have all kinds of strange weather such as this....



Snow in New Orleans.

The Answer to To Today's Problems......

Ask the fat guy to eat more doughnuts......

Democrats Looking Not Only to Protect Phoney-baloney Jobs.......

Mel Gibson had this one 100% right!

Massive employment at State governments is now at risk since unsustainable medical costs foisted on the States through unfunded Federal mandates such as Medicaid and SCHIP and gilded retirement plans that are woefully underfunded will put large budget pressures that will cause some states and local governments to actually fail.

So what is a socialist government to do when faced with such big problems? Spend money..... but on what? How about infrastructure? Anyone channeling the times of the New Deal? Yea, there are all kinds of things that the nation needs that we can now spend oodles of money on. But the massive infrastructure projects proposed by the incoming "Golden Calf" administration promises to put people to work for these incredibly useful things. There are all kinds of sewers that just have to be built. no one wants nasty sewage to foul where they are living. There are police stations around the nation that need energy efficient but expensive solar panels to augment their connections to the local power grid. There are roads that absolutely need widening due to all kinds of congestion that annoys citizens that have to spend 5-15 minutes extra to get to Taco Bell or Toy-R-Us to consume. Forget that if they were THAT necessary that they would have been a priority in State and local budgets in the recent past.

And there are lots of ditches that need digging around the country. And there is likely to be millions of illegal immigrants that are probably also losing their jobs that may either be forced to return to Mexico to eat or may have to rob other citizens to feed themselves and their families. These people could be employed digging these incredibly useful and necessary ditches.

I am sure that the "Golden Calf" administration has all kinds of incredible plans to put millions of people to work building a Utopian world of peace, love and harmony.

Passage of the Day....

To begin to understand today's problem, we have to have a sense of how we got there. Between 1994 and second quarter 2008, the U.S, housing stock more than doubled in value from $7.6 trillion to $19.4 trillion. Almost three quarters of that increase was due to a speculative bubble, the root cause of which was government policies designed to increase home ownership, largely among people who would be considered nonprime borrowers -- i.e., people without sufficient documented income or employment history and little or no savings or credit history.

The intellectual start of this mess was in a flawed Boston Federal Reserve study published in 1992 that purported to show that minorities were treated less well than whites. That study led to increased political pressure on banks to modify their standards with increased emphasis through the Community Reinvestment Act, and aided by U.S. Department of Housing and Urban Development regulations in the Clinton administration that required parity of outcomes in the lending process.

The effect of all of this meddling was compounded by the lax or incompetent supervision of Fannie Mae and Freddie Mac. All in all, the government got into the business of encouraging and then forcing lending institutions to make mortgage loans to people who could not pay them back. What we ended up with is a failure of government, which we have erroneously termed a failure of capitalism.

This is from the WSJ and is ever so true. Government meddling in business despite its good bur twisted logic intentions is just a travesty and very grave error. We are paying a very very heavy price ofr bad and sometime incoherent policies foisted upon the business world.

Back to the Good Ol' Days....

With T-bill rates, the interest rate that the government can borrow short-term money falling to near zero, we are returning to the old days of the 1940's and 50's when these kinds of rates were normal. Interesting that also, in those days as well as these, that inflation was low and economy focused on savings and investment and not on short-term speculation and financial engineering. We may be reentering a golden era where people actually try to build real businesses that make sense instead of creating short-term investment vehicles to make oodles of money in very short-term periods of time.

The biggest advantage now, over those days, is that the US Government has painted itself into a corner where they have failed or are poised to fail to deliver on the socialist programs of the 1930's and 1960's that are complicit in the current crisis and will be the basis for the next one. Just remember, the bill for these programs starts coming due in a bout 5 years as decades of profligate spending on seniors will no longer be affordable to the baby boomers that paid into these programs and will be unable to collect. I will just laugh at these 'flower power' people that thought that they were getting something from a government that should never have been in the business of retirement funding nor providing health-care to start with. Folks that think that they will get anything near what they were promised better start saving lots of money now since if they don't, no one else will do it for them.

GM Should Be Forced Into Bankruptcy.......

First, do not believe the hysteria about the loss of jobs from a bankruptcy. United Airlines has filed for bankruptcy several times over the past 2 decades. And they continue to fly passengers safely to hundreds of destinations around the world and employ numerous people to provide that service.

To be clear, there is a difference between Chapter 11 bankruptcy filing and Chapter 7 as seen in this Wikipedia entry....

Chapter 11 is a chapter of the United States Bankruptcy Code, which permits reorganization under the bankruptcy laws of the United States. Chapter 11 bankruptcy is available to any business, whether organized as a corporation or sole proprietorship, and to individuals, although it is most prominently used by corporate entities. In contrast, Chapter 7 governs the process of a liquidation bankruptcy, while Chapter 13 provides a reorganization process for the majority of private individuals with unsecured debts of less than $336,900.00 and secured debts of less than $1,010,650.00 as of April 1, 2007.

Chapter 7 just allows for an orderly sale of the firm as assets are sold and the proceeds are delivered to creditors. Chapter 11, on the other hand, allows for the organizations to be ongoing enterprises as they gain access to bankruptcy court sanctioned DIP- debtor in possession financing. When a company enters Chapter 11, management goes to the bankruptcy judge to get bank financing that is senior to other creditors to keep operating. Presumably, a Chapter 11 filing is what GM will do and this will allow for an orderly reorganization of business without many of the normal political and contractual factors that face operating enterprises.

So why are government officials so afraid of a bankruptcy of GM? There are several reasons:

1. A chapter 11 filing and the resultant need for additional cash through DIP financing may not be forthcoming from cash strapped banks when needed in several months.
2. Under a bankruptcy filing, contracts are abrogated and this means that all of the UAW contracts are broken and potentially renegotiated. Unions are huge supporters of Democrats and this is payback time for all of votes and money that came the Democrats way over the past several decades.
3. The government has been complicit in the decline in the US automotive industry as policy has meddled in the corporate decision making process. CAFE auto standards and safety mandates added cost without compensation.
4. A GM bankruptcy makes them more competitive compared to those not in bankruptcy as they will not have the same cost structure as the ones that remain solvent.
5. A automaker bankruptcy would pressure the parts suppliers and may cause bankruptcy of these entities that are owed money from the Chapter 11 filer.

Although some people find these arguments compelling, they are only compelling wrapped in ignorance. Bankruptcy allows for these companies to make the difficult choices that may not be offered to them in a solvent operating environment. Bankruptcy will strengthen the competitiveness of the American automakers as they will be allowed to shed some of the vestiges of the former American society that showered tax-free benefits on workers when they appeared to be reasonably priced.

Its only a matter of time before GM declares bankruptcy. Better to face up to in now and not waste taxpayer money on supporting a doomed business enterprise.

Apply for Bailout Funds.....

(Click to enlarge)

Quote of the Day.....

Free-market economist Henry Hazlitt observed in his classic 1946 book, Economics in One Lesson:

“For every public job created by a bridge project a private job has been destroyed somewhere else. We can see the men employed on the bridge. We can watch them at work...But there are other things that we do not see, because, alas, they have never been permitted to come into existence.”

I just laugh when I hear these clowns in government talking about how they are going to to stimulate the economy. The only thing that they are stimulating is their own importance in the economic fabric of everyday life. There is absolutely nothing that they will do that will create anything other than edifices and idols to themselves.

In fact, I think that modern liberalism is really false idolatry and putting false gods in-front of people. The Obamessiah is a prime example of the idolatry that infects modern liberalism. People do not look to traditional family, community and church for support but to the faceless government that people put a face on by idolizing those hired to do the job.

Also, governments inevitably comes up short on what is promised. What stability has been created through regulation? What security has been created for retirees that will retire during the next decade? What social justice is created when governments transfer payments from working class people through Medicare and social security taxes and deliver the money to wealthiest generational class of humans that ever lived on the planet? Liberals religiously believe in governments and government's abilities to provide and care for others and more importantly oneself. Furthermore, these liberals are not only idolizing government (1 and 2), they are also coveting their neighbor's wealth for distribution among themselves (10). Liberals, that already violate several will inevitably also violate the other commandments with the argument that it is best for all. When liberal mobs beat me to death (6) since I will never agree nor accept their beliefs it will be argued that it is for the greater good.

Modern liberalism is travesty against humanity since it defunds and denies us to be what we are and that is fallible and sinning humans. It denies us freedom to choose which includes the freedom to make mistakes. It defunds communities that care for its own members out of compassion. It defunds families and decreases responsibility for the health and welfare of those that are closest to you.