Friday, July 08, 2011
Epic Economic Fail
The President's (and Pelosi's and Reid's) "stimulus" program and associated policies have failed miserably. Witness today's news on jobs created and unemployment rate for June. Anybody who denies that the President's policies have failed is either insane or an idiot. The whole thing has been a Keynesian wet dream, and it has produced what one might expect from a wet dream--a sticky mess.
Congress MUST act now to reduce government spending, reduce the size of government and ease overly restrictive regulations and policies (the Canadian pipeline being only one case in point) in order to give the private sector some confidence that whatever they create won't be effectively confiscated. Any politician of any party who votes to kick the can down the road or votes in favor of anything that will increase the budget deficit (i.e., increase the national debt) should be turned out of office at the earliest opportunity. And by the way, the use of the term "spending cut" to describe a reduction in the increase in spending should be cause for tarring and feathering.
On its part, the public MUST wean itself from sucking at the federal teat and each person has to take steps to ensure his own economic well-being, as best he can. The alternative is turning the world's largest economy into mega-Greece, complete with riots in the streets.
If the people of this country spent as much time and effort focusing on the problems we face and studying the potential solutions as we have on the Casey Anthony trial, I'd feel a lot better about our future prospects. As it is, it feels more like we're on a party barge floating downstream on the Niagara River, and hardly anyone's listening to the roar of the falls.
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Congress MUST act now to reduce government spending, reduce the size of government and ease overly restrictive regulations and policies (the Canadian pipeline being only one case in point) in order to give the private sector some confidence that whatever they create won't be effectively confiscated. Any politician of any party who votes to kick the can down the road or votes in favor of anything that will increase the budget deficit (i.e., increase the national debt) should be turned out of office at the earliest opportunity. And by the way, the use of the term "spending cut" to describe a reduction in the increase in spending should be cause for tarring and feathering.
On its part, the public MUST wean itself from sucking at the federal teat and each person has to take steps to ensure his own economic well-being, as best he can. The alternative is turning the world's largest economy into mega-Greece, complete with riots in the streets.
If the people of this country spent as much time and effort focusing on the problems we face and studying the potential solutions as we have on the Casey Anthony trial, I'd feel a lot better about our future prospects. As it is, it feels more like we're on a party barge floating downstream on the Niagara River, and hardly anyone's listening to the roar of the falls.
Labels: Congress, Deficit, Economy, Federal budget, Financial crisis, government, Obama, Pelosi, Recession, Regulation, Reid, Stimulus, Unemployment
Saturday, July 31, 2010
Prediction
So Pres. Obama thinks the new Chevrolet Volt is God's gift to the car-buying public, at $41k per copy. Maybe so ... time will tell.
As previously stated, I'm no economist. I have no crystal ball. But I'm going to go out on a limb and predict that, although some early adopters and very earnest (and well-off) greens will buy the Volt, the vast majority of Volt sales will be to federal and state government agencies. And I predict that those agencies will find , when the cost of recharging stations and other support (including training for technicians) is added into the whole program, the cost of their Volts over the life of the vehicle will far exceed the cost for conventionally powered vehicles of similar size and performance capability.
BTW, I'm also assuming (perhaps naively) that the government won't do something to increase the cost of ownership of conventionally powered vehicles to the extent that the Volt looks good by comparison. That's the problem when the Federal government owns an industry--they can "un-level" the playing field in a myriad of ways. And of course politicians always want to make themselves look good.
As long as we have our present political class in power, the only thing I trust the government to do is muck things up. Ringo is right!
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As previously stated, I'm no economist. I have no crystal ball. But I'm going to go out on a limb and predict that, although some early adopters and very earnest (and well-off) greens will buy the Volt, the vast majority of Volt sales will be to federal and state government agencies. And I predict that those agencies will find , when the cost of recharging stations and other support (including training for technicians) is added into the whole program, the cost of their Volts over the life of the vehicle will far exceed the cost for conventionally powered vehicles of similar size and performance capability.
BTW, I'm also assuming (perhaps naively) that the government won't do something to increase the cost of ownership of conventionally powered vehicles to the extent that the Volt looks good by comparison. That's the problem when the Federal government owns an industry--they can "un-level" the playing field in a myriad of ways. And of course politicians always want to make themselves look good.
As long as we have our present political class in power, the only thing I trust the government to do is muck things up. Ringo is right!
Labels: Obama, Regulation
Tuesday, July 20, 2010
The SEC's Goldman Sachs Settlement
Here are the first two sentences of a Washington Examiner editorial dated 20 July 2010:
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It seemed a little odd last week when the Securities and Exchange Commission settled its lawsuit against Goldman Sachs within two hours of Senate passage of the Democrats' Dodd-Frank financial reform bill. After all, who could ask for a more perfect backdrop than a successful prosecution of the investment colossus of Wall Street and a prime mover in the economic crisis of 2008?
Wednesday, April 21, 2010The SEC's Goldman Lawsuit
After reading a whole bunch of articles and listening to a whole bunch of news stories and commentary about the SEC's lawsuit against Goldman Sachs, I find the timing vis a vis Obama's push for financial industry reform to be too cute by half. I do not believe the disclaimers by Rahm Emanuel and others that the White House or the DNC had no prior knowledge of the SEC action. As any literate person over the age of about 15 knows, politicians lie. Especially about things that help them get what they want.
Then there are the stories about how much money Goldman's employees gave the Obama campaign, and how Obama's not going to give any of it back. There are other stories about the former Goldman employees occupying posts in the administration. Strange bedfellows, indeed.
Sorry, Charlie, I just don't believe in coincidences, especially in this administration.
I have no actual evidence of collusion, of course, but I'd like to go on record with a comment about how unsurprised I will be if, after a "decent" amount of time, the SEC and Goldman reach a settlement that either lets Goldman off the hook or has them paying a face-saving (to the SEC) but immaterial (to Goldman) sum in settlement, and all will once more be right with the world.Labels: Banking, Finance, Obama, politics, Regulation, SEC
I'm unsurprised.
Labels: Banking, Corruption, Finance, Financial Reform, Obama, politics, Regulation, SEC
Wednesday, April 21, 2010
The SEC's Goldman Lawsuit
After reading a whole bunch of articles and listening to a whole bunch of news stories and commentary about the SEC's lawsuit against Goldman Sachs, I find the timing vis a vis Obama's push for financial industry reform to be too cute by half. I do not believe the disclaimers by Rahm Emanuel and others that the White House or the DNC had no prior knowledge of the SEC action. As any literate person over the age of about 15 knows, politicians lie. Especially about things that help them get what they want.
Then there are the stories about how much money Goldman's employees gave the Obama campaign, and how Obama's not going to give any of it back. There are other stories about the former Goldman employees occupying posts in the administration. Strange bedfellows, indeed.
Sorry, Charlie, I just don't believe in coincidences, especially in this administration.
I have no actual evidence of collusion, of course, but I'd like to go on record with a comment about how unsurprised I will be if, after a "decent" amount of time, the SEC and Goldman reach a settlement that either lets Goldman off the hook or has them paying a face-saving (to the SEC) but immaterial (to Goldman) sum in settlement, and all will once more be right with the world.
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Then there are the stories about how much money Goldman's employees gave the Obama campaign, and how Obama's not going to give any of it back. There are other stories about the former Goldman employees occupying posts in the administration. Strange bedfellows, indeed.
Sorry, Charlie, I just don't believe in coincidences, especially in this administration.
I have no actual evidence of collusion, of course, but I'd like to go on record with a comment about how unsurprised I will be if, after a "decent" amount of time, the SEC and Goldman reach a settlement that either lets Goldman off the hook or has them paying a face-saving (to the SEC) but immaterial (to Goldman) sum in settlement, and all will once more be right with the world.
Labels: Banking, Finance, Obama, politics, Regulation, SEC
Monday, December 28, 2009
What the Christmas Bomber Hath Wrought
Randy Barnett has helpfully posted the latest security directive issued by the TSA here.
I wonder what this is going to do to passenger air traffic between the US and elsewhere. And what it's going to do to the airlines' earnings.
Here's what CNNMoney.com is reporting at this writing. All the airlines are down between roughly 2% and 5.4% excepting, interestingly, Northwest.
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I wonder what this is going to do to passenger air traffic between the US and elsewhere. And what it's going to do to the airlines' earnings.
Here's what CNNMoney.com is reporting at this writing. All the airlines are down between roughly 2% and 5.4% excepting, interestingly, Northwest.
Labels: Airlines, bombings, government, Regulation, Terrorism
Monday, May 11, 2009
Turn the US into Haiti?
I've been saying that Mr. Obama wants to turn the United States into pre-Thatcher UK, but apparently I've been misinformed.
Actually, he wants to turn the United States into Haiti.
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Actually, he wants to turn the United States into Haiti.
Labels: Economy, Environmentalism, Obama, Regulation, Tax policy
Saturday, January 03, 2009
California Will Be Bankrupt Before General Motors
The following was posted as a comment to Ronnie Schreiber's piece at Pajamas Media.
I like Fighterdoc's analysis. As one who lives in California but who has old onnections with, if not roots in Michigan, I agree that both states (to follow Fighterdoc's analogy) should be in the ICU, but Michigan just might follow doctor's orders, while California is still in denial.
There are actually a lot of similarities between the two states, chiefly the dichotomy of the urban industrial and the rural agricultural, with the latter actually producing more value. I have long said that Los Angeles is Detroit with palm trees, and I believe that California is headed for a "payless payday" as happened in Michigan in 1959, and which led directly to the revised state Constitution in 1963 that Ronnie refers to.
The real problem in California is due to gerrymandered safe seats in the legislature, which has allowed the development of a political class that is anything but answerable to the voters, and instead is beholden to special interests such as the teachers' union and the prison guards' union. California has been an eager participant in the Nation's credit binge which led to the economic collapse of last fall, but unlike most of us, the state of California continues to live beyond its means. Even now, with the fiscal crisis in the state coming rapidly to a head, the legislature will not consider reducing spending or laying off a single state employee. Term limits didn't help, because each legislator leaving office due to term limits is replaced by a clone who is owned by the same special interests and holds the same political philosophy.
I believe that raising taxes in an already high-tax state is not the answer, because in response companies and people will relocate to more economically friendly states like next-door Nevada and Arizona, and even Texas and Idaho. Cutting spending and removing restrictions on how existing funds are spent is the only answer, and the people of California will have to get by with fewer State services. Unfortunately, the politicians' mindset is to extort higher taxes from the populace by first cutting things like police and fire protection rather than paring back unnecessary pet projects and easing stifling regulation.
Just watch folks -- in a couple years California will no longer be known as the Golden State, but rather as the New Jersey of the West. Or maybe the Mexico of the North. (Cross posted to my blog.)
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I like Fighterdoc's analysis. As one who lives in California but who has old onnections with, if not roots in Michigan, I agree that both states (to follow Fighterdoc's analogy) should be in the ICU, but Michigan just might follow doctor's orders, while California is still in denial.
There are actually a lot of similarities between the two states, chiefly the dichotomy of the urban industrial and the rural agricultural, with the latter actually producing more value. I have long said that Los Angeles is Detroit with palm trees, and I believe that California is headed for a "payless payday" as happened in Michigan in 1959, and which led directly to the revised state Constitution in 1963 that Ronnie refers to.
The real problem in California is due to gerrymandered safe seats in the legislature, which has allowed the development of a political class that is anything but answerable to the voters, and instead is beholden to special interests such as the teachers' union and the prison guards' union. California has been an eager participant in the Nation's credit binge which led to the economic collapse of last fall, but unlike most of us, the state of California continues to live beyond its means. Even now, with the fiscal crisis in the state coming rapidly to a head, the legislature will not consider reducing spending or laying off a single state employee. Term limits didn't help, because each legislator leaving office due to term limits is replaced by a clone who is owned by the same special interests and holds the same political philosophy.
I believe that raising taxes in an already high-tax state is not the answer, because in response companies and people will relocate to more economically friendly states like next-door Nevada and Arizona, and even Texas and Idaho. Cutting spending and removing restrictions on how existing funds are spent is the only answer, and the people of California will have to get by with fewer State services. Unfortunately, the politicians' mindset is to extort higher taxes from the populace by first cutting things like police and fire protection rather than paring back unnecessary pet projects and easing stifling regulation.
Just watch folks -- in a couple years California will no longer be known as the Golden State, but rather as the New Jersey of the West. Or maybe the Mexico of the North. (Cross posted to my blog.)
Labels: California, California legislature, Economy, government, Mexico, Michigan, Regulation, Tax policy
Monday, September 29, 2008
Burnin' Down The House Update
Youtube has pulled the video, ostensibly because of a copyright infringement claim by Warner Music Group. I'm no copyright lawyer, but it seems to me that the snippets of songs in that video would constitute "fair use." And if not, it should.
I wonder who the Warner Music Group execs are supporting for president?
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I wonder who the Warner Music Group execs are supporting for president?
Labels: Financial crisis, politics, Regulation, video, Youtube
Friday, September 26, 2008
Burnin' Down the House: How We Got Here
A friend emailed me a link to this video. It goes pretty fast, so use the pause button freely.
Whether or not you agree, it is consistent with stories that I have read in the Wall Street Journal. Remember, people tend to get the government they deserve.
Vote wisely!
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Whether or not you agree, it is consistent with stories that I have read in the Wall Street Journal. Remember, people tend to get the government they deserve.
Vote wisely!
Labels: Banking, Democrats, Economy, Election, Financial crisis, Obama, politics, Regulation, Republicans, video
Wednesday, September 24, 2008
The Bailout
I sent the following to my three Federal representatives, both Sens. Feinstein and Boxer and Congressman Bilbray this morning, before McCain's announcement that he's suspending his campaign in order to return to Washington and join passing whatever legislation is going to come out of the sausage machine.
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I am very concerned about the headlong rush--some might say stampede--to spend $700 Billion to resolve the credit and banking crisis arising from the subprime mortgage debacle. I believe that if it is absolutely necessary to keep the economy from crashing, then by all means do it. But I am not yet convinced that there aren't other, less drastic and less costly means to accomplish the necessary ends. In short, hitting up the taxpayers should be the last resort, not the first.
I have read about several other possibilities for action that would reduce the potential hit to the taxpayers, such as the Government or its agent being a "buyer of last resort" for the bad paper at a stated, fixed percentage of their face value, or by temporarily suspending the "mark to market" rules relating to specified classes of securities, i.e., those for which no market exists, and sequestering them on the affected firms' balance sheets.
I'm no expert on markets or economics, but it doesn't take a genius to realize this is a complex problem. Accordingly, all the alternatives should be examined before a course is set. I understand the political pressures, but I think it's more important to get this right than to do it too quickly. It is also the duty of our Congress (both houses) to do what's best for the American people after duly considering all factors, and not succumb to the herd mentality, which was a factor in causing the crisis in the first place.
I urge you to carefully consider all the alternatives "with all deliberate speed" before voting for any plan. I also urge you to avoid trying deal with more than the most urgent issue in this legislation. It is at times like this that unintended consequences are most likely to arise, and whatever is enacted should be as simple as possible.
Labels: Banking, Economy, Finance, Financial crisis, politics, Regulation
Monday, September 22, 2008
Financial Meltdown/Miraculous Recovery: Take 2
Kevin Hasset at Bloomberg.com says the Democrats caused the current financial crisis by blowing off a senate bill back in 2005 (S. 190) that would have reined in Fannie and Freddie before they flooded the market with mortgage backed securities of dubious safety.
Alan Greenspan is cited:
Prophecy, I tell ya. But the Dems didn't listen. McCain was a cosponsor of S. 190.
H/T Instapundit
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Alan Greenspan is cited:
If Fannie and Freddie ``continue to grow, continue to have the low capital that they have, continue to engage in the dynamic hedging of their portfolios, which they need to do for interest rate risk aversion, they potentially create ever-growing potential systemic risk down the road,'' he said. ``We are placing the total financial system of the future at a substantial risk.''
Prophecy, I tell ya. But the Dems didn't listen. McCain was a cosponsor of S. 190.
H/T Instapundit
Labels: Banking, Democrats, Economy, Finance, McCain, Regulation
Saturday, September 20, 2008
Financial Meltdown or Miraculous Recovery?
The financial markets have been on an unbelievable roller coaster ride this week, with some relief Thursday and Friday as the US Government moved to put full faith and credit behind some unprecedented moves to stabilize the credit markets. Story here.
The talking heads say this can all be traced back to the subprime mortgage debacle, and the presidential candidates are falling all over themselves trying to blame each other. I am of the opinion that the President has very little control over the economy, and generally speaking it's better to let financial kinks work themselves out without government intervention. The problem now is, that strategy apparently carries a significant risk of shutting down the nation's, and possibly the world's, credit markets. That would be catastrophic, so I guess it's appropriate for the government to step in. One thing's certain: no other government has the capability of doing anything about this mess. The danger is, of course, that the cure will be worse than the disease.
My take on the subprime market issue is that the problem was caused by two main factors. First, it was absolutely stupid during an obvious housing bubble to lend money to people who had no hope of ever making their mortgage payments. It was even more stupid to lend to mortgagees without even doing the most elementary due diligence. Second, one reason for such rampant stupidity among (presumably) rational business people was, everyone in the chain from mortgage originators to the banks to Fanny and Freddie and the investment banks who bought the mortgage backed securities believed that someone else would ultimately take the hit if the mortgages went bad, and they grossly underestimated the likelihood of that happening. Also, I suspect at some point the herd instinct had something to do with it--some companies invested heavily in the mortgage backed securities because someone else was doing it. I absolutely believe that in each and every one of those companies that invested heavily in those securities, some lonely voice warned against the risk, but was ignored because of the profit potential, and besides, "everyone's doing it." Obviously those decision-makers were taking some kind of youth drug, because they reverted to teenage logic. Great argument for the "CEOs are grossly overpaid" crowd, don'tcha think?
As I understand it, the reason those securities are not tradable right now is that nobody knows what they're worth. Lehman, AIG, Fanny and Freddie and Bear all had significant portions of their assets tied up in those securities, and as a result of their being unsellable and mark-to-market accounting rules, they had to revalue those assets to zero. It's almost the same effect as if the bank was robbed, with no deposit insurance.
I'm not a financial professional, and I've never taken any courses in finance except in the College of Life; this stuff is way too complex for me to analyze with any kind of scholarly precision, but it seems obvious to me that the best-of-both-worlds status of Fannie and Freddie had a lot to do with this mess, as did the do-gooder regulations imposed by Sarbanes-Oxley. I expect a lot of rules and regs will be rewritten as a result of this, and I can only hope and pray that those who are doing the rewriting look at the whole system using dynamic analysis techniques, and that lots of time is spent looking for unintended consequences. The taxpayers who are now on the hook for approximately $1 Trillion deserve nothing less.
BTW, I sure would like to know what George Soros has been doing with his money for the last few months, especially the last few weeks. Just sayin'.
UPDATE 20080920:1510PDT: Tom Maguire has an excellent informative and educational discussion of the issue here.
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The talking heads say this can all be traced back to the subprime mortgage debacle, and the presidential candidates are falling all over themselves trying to blame each other. I am of the opinion that the President has very little control over the economy, and generally speaking it's better to let financial kinks work themselves out without government intervention. The problem now is, that strategy apparently carries a significant risk of shutting down the nation's, and possibly the world's, credit markets. That would be catastrophic, so I guess it's appropriate for the government to step in. One thing's certain: no other government has the capability of doing anything about this mess. The danger is, of course, that the cure will be worse than the disease.
My take on the subprime market issue is that the problem was caused by two main factors. First, it was absolutely stupid during an obvious housing bubble to lend money to people who had no hope of ever making their mortgage payments. It was even more stupid to lend to mortgagees without even doing the most elementary due diligence. Second, one reason for such rampant stupidity among (presumably) rational business people was, everyone in the chain from mortgage originators to the banks to Fanny and Freddie and the investment banks who bought the mortgage backed securities believed that someone else would ultimately take the hit if the mortgages went bad, and they grossly underestimated the likelihood of that happening. Also, I suspect at some point the herd instinct had something to do with it--some companies invested heavily in the mortgage backed securities because someone else was doing it. I absolutely believe that in each and every one of those companies that invested heavily in those securities, some lonely voice warned against the risk, but was ignored because of the profit potential, and besides, "everyone's doing it." Obviously those decision-makers were taking some kind of youth drug, because they reverted to teenage logic. Great argument for the "CEOs are grossly overpaid" crowd, don'tcha think?
As I understand it, the reason those securities are not tradable right now is that nobody knows what they're worth. Lehman, AIG, Fanny and Freddie and Bear all had significant portions of their assets tied up in those securities, and as a result of their being unsellable and mark-to-market accounting rules, they had to revalue those assets to zero. It's almost the same effect as if the bank was robbed, with no deposit insurance.
I'm not a financial professional, and I've never taken any courses in finance except in the College of Life; this stuff is way too complex for me to analyze with any kind of scholarly precision, but it seems obvious to me that the best-of-both-worlds status of Fannie and Freddie had a lot to do with this mess, as did the do-gooder regulations imposed by Sarbanes-Oxley. I expect a lot of rules and regs will be rewritten as a result of this, and I can only hope and pray that those who are doing the rewriting look at the whole system using dynamic analysis techniques, and that lots of time is spent looking for unintended consequences. The taxpayers who are now on the hook for approximately $1 Trillion deserve nothing less.
BTW, I sure would like to know what George Soros has been doing with his money for the last few months, especially the last few weeks. Just sayin'.
UPDATE 20080920:1510PDT: Tom Maguire has an excellent informative and educational discussion of the issue here.
Labels: Banking, Economy, Finance, Markets, Regulation
