Friday, January 09, 2009

Quotes to Live By

"A lot of people like to fool you and say that you're not smart if you never went to college, but common sense rules over everything. That's what I learned from selling crack."~Snoop Dogg

What I learned from selling crack is you best be packing heat.

Essential Reading on Israel/Gaza

1. The LRB has made available an old article by Henry Siegman on how to understand Israel's relationship to Gaza and what would need to be done to provide Israel a sense of long-term security.

2. Rashid Khalidi's recent op-ed in the NYT, "What You Don't Know About Gaza," rehearses many of the points made in Siegman's article, but is worth reading nonetheless.

Wednesday, January 07, 2009

Sentences That Make Me Smile

“We expect that discussion around entitlements will be a part, a central part” of efforts to curb federal spending, Mr. Obama said at a news conference. By February, he said, “we will have more to say about how we’re going to approach entitlement spending.”

The Inside Scoop

I view my task as a douchebag occasional blogger to provide my readers (all five of you) with ground breaking, earth shattering information.  Well, check yourself before you wreck yourself, the OED (the Oxford English Dictionary) is considering including the word- conversate, as in we be conversating.

"TNC: Will conversate be included after the next revision of the OED?
JS: It's very likely to go in."

You read it here first, well, unless you read Ta-Naheisi Coates' blog, in which case you probably read it there first.

Tuesday, January 06, 2009

More on the Big Four Sucking, KPMG edition

Some of KPMG's accomplishments over the last fiver years, courtesy of wikipedia:

  • In 2004, KPMG agreed to pay $115 million to settle lawsuits stemming from the collapse of software company Lernout & Hauspie Speech Products NV.[10]
  • In 2005, the U.S. member firm admitted criminal wrongdoing in a multi-billion dollar tax shelter fraud.[11]
  • In 2006, Fannie Mae sued KPMG for malpractice for approving years of erroneous financial statements.[12]
  • In February 2007, KPMG Germany investigated for ignoring questionable payments in Siemens bribery case.[13] (Siemens agreed to pay a record $1.34 billion in fines to settle the case in December, 2008.)
  • In October 2007, KPMG's member firms in the UK, Germany, Switzerland and Liechtenstein merged to form KPMG Europe LLP. They now have joint Chairmen, John Griffith-Jones and Ralf Nonnenmacher.[3]
  • In March 2008, KPMG accused of enabling “improper and imprudent practices” at New Century Financial, a failed mortgage company.[14]
  • In March 2008, KPMG agreed to pay $80 million to settle suits from Xerox shareholders over manipulated earnings reports.[15]
  • In November 2008, Siemens Supervisory Board recommended changing auditors from KPMG to Ernst & Young.[16]
  • In December 2008, two of Tremont Group’s Rye Select funds, audited by KPMG, had $2.37 billion invested with the Madoff "Ponzi scheme."[17] Class action suits were filed

The Big Four Suck

The Big Four (the big four accounting firms- KPMG, PriceWaterhouseCooper, Ernst and Young, and Deloitte Touche) are getting embroiled in the Madoff scandal. Basically it seems they were incompetent. This doesn't surprise me having worked with (not for) one of the four a decent amount and having some exposure to the other three. I saw an amazing number of fuckups and idiots, but I had always attributed this to being exposed to private firms public sector practices.

Tuesday, December 30, 2008

WORDS: "Taint"

Speaking in defense of Blagojevich's appointment of Roland Burris as Senator of Illinois, Bobby Rush said of him that "Roland Burris is worthy. He has not, in 40 years of public service, had one iota of taint on his record as a public servant." Rush's subsequent remarks were designed to distinguish Blagojevich's tainted name—tainted by the "allegations" lodged against him by Patrick Fitzgerald—from Burris's supposedly untainted record. TV commentators seized on the word "taint" to talk about what has become of Blagojevich's reputation in Illinois politics. Though they seemed to be doing so for lack of a better term, this one actually fits the bill pretty well. One definition in the OED of the verb to taint is "to accuse of crime or dishonour." In this regard Blagojevich is clearly a tainted man on both scores.

Monday, December 29, 2008

A Festivus for the Rest of Us

Here is Ta-nehisi Coates on Kwanzaa and the holiday season in general:

"Meh, I don't celebrate Kwanzaa. My Dad was a Black Panther, so I wasn't exactly brought up to think of Karenga (call that Negro "Ron") as heroic. I didn't celebrate Christmas either, and the general consensus in my home was that Kwanzaa was throw-away for people who couldn't deal with not getting gifts. 

But so what? Seriously, this idea that Kwanzaa is fundamentally different from other holidays is silly and unreflective. Debating the holidays, is like debating sex acts. Dude, there's no clean or dirty, only what you're into or what you're not. Do we really want to do the knowledge on Christmas here? Seriously??"

Debating sex acts would be an improvement over spending a couple pay checks on gifts people don't like. Engaging in the sex acts would probably raise social utility even more.  

Thursday, December 25, 2008

The Debate over Festivus

A small debate is raging on the Internet over the worth of celebrating "Festivus" in the wake of a Festivus pole that was put up in the Illinois capital. Critics (e.g. here) say it's not a real holiday because it was invented to mock Christmas. They say it's meaningless, not about anything, indeed, invented in a 1997 episode of Seinfeld ("The Strike"), a show that is itself about nothing (FYI: it was really invented much earlier; read the details on Wikipedia's festivus page).

Most of these critics have in mind some idealized image of what Christmas is supposed to be all about. To wit, "a good, merry winter celebration with the tree, the turkey, and the presents, customs mostly borrowed from pagan traditions." Compare Bill McKibben's description: "Christmas is a school for consumerism—in it we learn to equate delight with materialism. We celebrate the birth of One who told us to give everything to the poor by giving each other motorized tie racks.” This reflects a certain cynicism, but at least it is not blind to the way in which Christmas is super-saturated with the imperative to buy, buy, buy. The point is put with neutral understatement on Wikipedia's page on Christmas: "Christmas has become a major event for many retailers."

Against this frenzy of consumerism Festivus was born according to the Seinfeld episode:
Frank Costanza: Many Christmases ago, I went to buy a doll for my son. I reached for the last one they had, but so did another man. As I rained blows upon him, I realized there had to be another way.
Cosmo Kramer: What happened to the doll?
Frank Costanza: It was destroyed. But out of that a new holiday was born: a Festivus for the rest of us!
Festivus, like all holidays, is what you make of it.

Sunday, December 21, 2008

The Next Move

Brad DeLong links to a post from the Baseline Scenario on the Glen Hubbard article in the WSJ. The Hubbard plan is basically two plans: 1 part freddie/fannie nationalization, 1 part Bailie Mae. The plan is to reduce mortgage rates to 4.5% for everyone, new home buyers and those who want to refinance. Basically, we are going to subsidize housing to get us out of the mess that we got into in large part because housing was generously subsidized. I tend to think a better way of bringing housing supply and demand into balance would be to increase immigration, both skilled and unskilled, massively. Unskilled immigration might be a difficult sell, though, we could always re-encourage illegal immigration by returning to more lax enforcement. However, increasing skilled immigration shouldn't be as tough a sale.

Friday, December 19, 2008

To the People of Illinois: There is No Presumption of Innocence in the Court of Public Opinion

"To the people of Illinois, I ask that they wait and be patient, sit back and take a deep breath, and please reserve judgment. Afford me the same rights that you and your children have. The presumption of innocence. The right to defend yourself. The right to your day in court. The same rights that you would expect for yourselves."
—Rod Blagojevich, 12/19/08

The legal right to be presumed innocent until proven guilty does not apply outside the courtroom. Let me repeat that: if you are not the judge or the jury in Blagojevich's criminal case, the presumption of innocence doctrine is irrelevant and has no bearing on what you say or think. Outside the courtroom, you are allowed to make judgments about the guilt or innocence of the accused, and to profess your views any way you like, make signs, go on television, whatever. The presumption of innocence, as Dick Cavett reminds us, "has nothing whatever to do with you and me. We can talk, write, broadcast and even put up a billboard (if so foolish) stating that the accused is the one who did it. It has to do with our system. If you find yourself accused of a crime, you do not have to prove your innocence. The burden is on the other side. The prosecution has to prove your guilt. That’s about it. And it is not even a rule of law. It is a rule of evidence, relevant only to the judge and the jury."

Auto Bailout

Bush is going to release TARP money for GM and Chrysler.  The terms are actually pretty good for the taxpayer and it appears that the conditions set for receiving the money are similar to what would occur in a Chapter 11 Bankruptcy:


This is probably better than the unions would have gotten in a bankruptcy in so far as it requires the automakers to pay into the VEBA fund (as a result of contract negotiations between the unions and the automakers last year health care benefits for retirees were taken over by the unions but the automakers had to make significant one time contributions to the health care trust fund- VEBA).  I am guessing in a bankruptcy proceeding the judge would tell the unions that there is a neat thing callled medicare and to go enroll.  So this is maybe a little more even handed.

Thursday, December 18, 2008

Bonuses

This is brilliant!  Credit Suisse is giving their executives bonuses in the form of Mortgage Backed Securities.  Seems fitting.

Wednesday, December 17, 2008

This Plutocracy and Nepotism stinks to everybody

It's a good sign for small-d democrats that more and more people are voicing their concern over the rampant nepotism and plutocracy in American politics. Whatever happened to skill and merit? Look for more posts on this issue in weeks to come.

Nicholas Kristof takes account of the scene in these words:
And frankly it is discouraging to see the way the system so often elevates particular families into politics, generation after generation, because of their names, bank accounts and Rolodexes. Bill Clinton and Barack Obama are self-made exceptions, but we now have a president who rose in part because of who his father was, and there are many such cases. After all, Beau Biden seems poised to succeed Joe Biden in the senate from Delaware, once his military service is completed. Ken Salazar’s senate seat from Colorado may be filled by his brother John. And here in New York State, we have a governor who is a second-generation politician who is choosing a senator from among such front-runners as a woman who is the daughter of a former president and a man who is the son of a former governor.
Here's a Letter to the Editor worth noting from a reader of the NYT on the subject:

To the Editor:

It is amusing that Andrew M. Cuomo, who owes his whole career to his dad, may not get the Senate seat of Hillary Rodham Clinton (who owes her whole career to her husband) because David A. Paterson (who owes his whole career to his dad) may give it to Caroline Kennedy (who owes her whole career to her dad).

You would think a state as large as New York could find someone who deserves something on his or her own.

David Machlowitz
Westfield, N.J., Dec. 16, 2008

Ag

Tom Vilsack has been slotted for the Ag Secretary. This an awful but predictable pick. I tend to think this will mean Obama will be inclined to piss more money away on Ethanol.

Update: I might have spoken too quickly. Apparently Vilsack is on record as opposing tariffs imposed on Brazilian sugar based ethanol which is much more efficient than corn based ethanol. I still think this nomination is less than optimal but maybe it is not as bad as I initially thought.

Iraq, shoes, and insults

When Bush was the target of an Iraqi journalist's thrown shoes, most of the major TV news outlets called attention to the insulting meaning of the act. Which is true, of course. But perhaps it would have helped to put the act in a political context: when Saddam Hussein's statue was pulled down in the Spring of 2003, Iraqis pounded it with their shoes.

Inflation

It will be interesting to see what the Fed does now that it has gone ZIRP (Zero Interest Rate Policy).  Obviously cutting interest rates is no longer on the table.  There is more discussion of printing our way out of this mess.  Here is Ken Rogoff on increasing inflation.  Here's Greg Mankiw with more of the same. Here's Paul Krugman.  Arnold Kling Dissents.

Tuesday, December 16, 2008

We're not that stupid Mr. President

As Frank Rich observes in his book, The Greatest Story Ever Sold, the media has it all wrong about Bush. The problem with W. is not that he's stupid, but that he talks to the rest of us as though we are.

Case in point: his interview with Candy Crowley which aired on CNN today. He said:

"You know, the military looks at the president and wonder whether or not the president's going to make decisions based upon victory. Or, whether or not the president would be making decisions based upon its political skin. And if you ever make decisions based upon your political skin where troops are in harms way, you as commander-in-chief will have a lot of problems keeping the respect of the military."

Frank Rich isn't the only one who knows that this is a total lie - many in the military know this as well. Rich writes:
It was all too predictable that even when the administration was forced into rebuilding Iraq, it would time every pivot point, from the creation of a constitution to the scheduling of elections, to deadlines dictated by Rove's political goals at home (whether a State of the Union speech or a domestic election), rather than to the patience-requiring realities of forging a post-Saddam government. That cynical priority was what had dictated the timing of the rollout of the product in the first place: it wasn't a mushroom cloud that was imminent as the White House pressed for a congressional resolution in the fall of 2002, it was the midterms....Shouldn't it have raised alarms that a war was being rushed on an arbitrary and reckless timetable that was in sync with an American election campaign? (222)

Journalist Crowley: have you not learned anything about the ways of this White House? Shame on you for letting the President's remark pass without question as though it were true.

The Word of the Year

Here's a bit of belated new: The Oxford English Dictionary's Word of the Year is hypermiling.  You learn something new everyday.

The Fed Cuts Rates

They have cut it down to .25%.  The Lost Decade has arrived.

Depression Economics

Over at TPM Cafe they are discussing of Paul Krugman's recently re-released book "The Return of Depression Economics".  Brad DeLong, Dean Baker, Paul Krugman, and Robert Reich are leading the discussion.  Brad DeLong has several insightful posts as is his norm but this sentence jumped out at me: 
"We clearly need to separate capital adequacy regulation from rating agencies that can be gamed in order to eliminate regulatory arbitrage..."

Everyone is constantly calling for regulation to prevent future crises, which is valid.  But we also must look at the extent to which the present regulatory framework fueled the crisis.  One of the things that has clearly emerged is that the securitization of mortgages was favored from a regulatory standpoint as opposed to the traditional model where a bank both originated and held the mortgage.  This in large part fueled the leveraging of the financial sector.  That and the fact that every banker in America was seemingly stupid.

Monday, December 15, 2008

Reducing Wages

I really don't get why bringing the UAW workers wages in line with the rest of the industry is considered beyond the pale.  It is in many senses overly generous. The big three have a horrible reputation for quality.  In order for them to compete they will not only need to build cars of comprarable or superior quality but be able to compete on price.  To me that means that workers' wages need be below that of their competitors.  There are consequences of failure, and those consequences shouldn't be solely borne by the taxpayer.

Czars

Why do we always have policy Czars as opposed to Tsars?

Friday, December 12, 2008

"Double Shot at Love"

Is this for real?

American Bailout

Eliot Spitzer proposes that Washington sets up a competition among the big 3 for who receives the bailout.  Whichever 2 companies present the best business plans get to divvy up the bailout monies.

BTW, Eliot Spitzer is now a columnist for Slate.  Not a bad gig for a disgraced governor.  Maybe Rod Blagojevich could get a weekly column/diary- "Letters from Levenworth".

Barney Frank's Error

'"No. We’re not propping up companies. That’s your mistake," he tells Stahl, who had asked him about taxpayer money going to prop up companies that had made bad decisions. "We’re propping up individuals. The world doesn't consist of companies. The world is people. The country is people."'

The implicit thrust of Barney Frank's argument is correct, we shouldn't prop up companies, but we should assist those people who work for them and whose livilihoods are seriously damaged by their employer's demise. However, Frank's response is in fact to prop up the companies or in other words, to protect those jobs.  Why should the American taxpayer have to subsidize a company so it can have the "privilege" of paying for an inferior product.  Ostensibly the taxpayer already has that privilege and has decided not to exercise it. A more promising and just route would be to let companies fail and provide their workers with unemployment insurance (for a limited duration), tranining assistance, gap coverage in their medical care (which wouldn't be necessary if the health system was predicated on employer provided health care but I digress), and relocation assistance.  

Two Words not Mentioned in the Auto Bailout Discussions

Work Rules.  Just saying.  They are a huge disadvantage for American auto manufacturers, arguably a bigger competitive disadvantage than the wage discrepancy.  I actually thought the alternative bill proposed by Corker was entirely sensible.  I hope something along those lines makes it through in January.

An Object Lesson in Political Corruption

I found this little gem on page 72 of the criminal complaint against Blago:
Later on November 12, 2008, ROD BLAGOJEVICH talked with JOHN HARRIS. ROD BLAGOJEVICH stated that his decision about the open Senate seat will be based on three criteria in the following order of importance: “our legal situation, our personal situation, my political situation. This decision, like every other one, needs to be based upon on that. Legal. Personal. Political.”
Not mentioned by Blagojevich is the criterion of merit or ability for holding the open Senate seat, nor is there any regard for what would be beneficial for Illinois, or anybody outside his own family. He seeks only men and women of wealth with the right connections who will help him bring honor and benefit to his own family. The main cause of this corruption is the ambition of Blagojevich to get himself put in higher offices or in a position to make a lot of money after he leaves office, and to do either one of these things he desperately needs to avoid impeachment as governor, which would take away his reputation. But now that his foolish ambition is out in the open, he'll have great difficulty forging an alliance with anyone.

For a brief "readers guide" to the criminal complaint, go here.

Thursday, December 11, 2008

Hard Core

Martha Stewart will be on Top Chef. Go big or go home.

Top Chef Blogging

So I am watching Top Chef (how did I live without a DVR for so long), anyhow I never noticed this but Jeff is the chef of the Dilido Beach Club if I read it correctly. You ask why is this significant? It's not but it would be if it were the Dildo Beach Club and all the food served was cooked in a phallic mold.

Automaker Bailout

The democrats seem intent on replicating the structure of a bankruptcy proceeding for the automakers without having them go into bankruptcy.  It appears the car czar (or commissar if you prefer) is nothing more than an ersatz bankruptcy judge.  However, this all leads me back to my original point regarding the bailout, if what the automakers need is a massive reorginization then what they should do is go into bankruptcy.  If they bankruptcy is not a tenable option because automakers cannot obtain debtor in possession financing on credit markets the government can provide the DIP financing.  The only purpose this legislation seems to serve is to kick the bucket further down the road and in the mean time give democrats hope of creating a government sponsored enterprise in the form of the domestic automobile industry.  This is a stupid bill.  That said, I am not sure the republicans shouldn't vote for it.  It could be that this bill as awful as it is, is simply the least bad option.

Barack Names DOE Secretary

Barack Obama is nominating Steven Chu to serve as the Energy Secretary.  You have probably never heard of Steven Chu as he is not a former governor or senator but an actual scientist, a nobel-prize winning physicist at that.

Monday, December 08, 2008

Recycling: Still Little More Than A Profit-Making Scheme

This post could be titled "Against Recycling - Part 2". In my first post ("Against Recycling") I opined that recycling has functioned merely to license ever more consumption, thereby producing even more waste. And now, as a result of the downturn in markets for scrap materials, some recycling programs, according to the New York Times, are struggling to find a place other than the garbage dumps - where everything eventually ends up anyway - to send their stock of recyclable material:

The downturn offers some insight into the forces behind the recycling boom of recent years. Environmentally conscious consumers have been able to pat themselves on the back and feel good about sorting their recycling and putting it on the curb. But most recycling programs have been driven as much by raw economics as by activism.

Cities and their contractors made recycling easy in part because there was money to be made. Businesses, too — like grocery chains and other retailers — have profited by recycling thousands of tons of materials like cardboard each month.

But the drop in prices has made the profits shrink, or even disappear, undermining one rationale for recycling programs and their costly infrastructure.

“Before, you could be green by being greedy,” said Jim Wilcox, a professor at the Haas School of Business at the University of California, Berkeley. “Now you’ve really got to rely more on your notions of civic participation.”

Friday, December 05, 2008

Office 2007

My office is slowly converting over to Office 2007.  I was unfortunately placed on the office pilot for deployment.  Anyhow, it sucks, totally counter-intuitive.  However, the track changes feature is better.

Another 500,000 Jobs Bite the Dust

The unemployment rate has just jumped up to 6.7%.  How long till we hit double digit unemployment?  I say somewhere in 2010.

Wednesday, December 03, 2008

Obama Backs Off Windfall Profits Tax

I think this is a good thing.  A windfall profits tax would do little other than increase our consumption of foreign oil while having a negligible impact on overall consumption.  If the end goal is to decrease consumption of fossil fuels the best means of achieving that goal is to tax the consumption of fossil fuels, not production.

Monday, December 01, 2008

Office Etiquette

I have a pregnant coworker who is currently experiencing bouts of morning sickness.  Nothing out of the norm there, however, instead of running off to the bathroom to relieve herself she just sits in her cube and pukes her guts out, albeit in a trash can.  But further she is yet to remove her trash can and empty the contents.  I recognize that morning sickness happens and pregnancy can be unpleasant but is it really too much to ask that you go to bathroom if you are going to upchuck?  I have never heard of anybody just sitting in the cube and puking all morning.

Tuesday, November 25, 2008

The Federal Government as a Hedge Fund

Arnold Kling Explains:
"What we do know is that the risk premium on Treasuries is really, really low. We are like the hedge fund of last resort for the world's investors. Hamilton says the hedge fund should buyTIPS and foreign securities (I assume he means foreign government bonds). That's fine. The hedge fund should also buy debt from Freddie Mac and Fannie Mae, because that debt still trades at a risk premium relative to Treasuries, even though taxpayers are already on the hook for it.

The hedge fund should buy good stuff. Let the bad stuff sit and rot, or collect it as part of the process of shutting down failed institutions."

He was expanding on an idea floated by James Hamilton over at Econbrowser. Anyhow, it has come to pass.

Bush Pardons

I haven't looked at many of the pardons in detail but one of the things that is striking is the extent to which the pardons relate to drug related offenses.  In fact he just pardoned John Forte of the Fugees for Coke possession (lots of Coke).  But the shame in this is that Bush could have done something in office to push for more rational sentencing guidelines regarding non-violent drug crimes but didn't do a blessed thing.

Monday, November 24, 2008

Frighteningly Stupid Article


Here's a NY Times article analyzing whether the turnaround of the steel industry can be a good model for the automobile industry.  The article discusses the similarities between the too industries, namely legacy costs and how banktrupcies and the resulting reorganizaitons were good for the steel industry.  It investigates where the comparison between the two industries dissolve, steel is a commodity and thus price is king; cars are a consumer good, consumer perception is important, not just price.  It fails to mention that the demand for steel exploded in the last decade because of the rapid growth of China and to a lesser extent India's economy.  The market for steel grew tremendously.  Right now, China consumes roughly a third of all steel produced.  You throw in the rest of Asia and you have a majority of all steel consumption.

Imagine a counterfactual, China's growth didn't occur to the extent it did.  Would the steel industry's reorganization have been adequate to stay competitive?  Maybe, but such growth in demand can hide a multitude of sins.  Just ask a mortgage broker.

More on Coleman-Franken Recount

When I read things like this I tend to think that regardless who ultimately wins, nobody will view it as a legitimate victory.  This race has stunk to high hell.  And this surprises me because Minnesota is one of the few states in the country that does have successful bureaucracies.

Friday, November 21, 2008

Geithner to Treasury

Also, Larry Summers will be taking some "senior role" in the White House (I suggest his title be economic consigliere).

BTW: as of this posting this wasn't anywhere on the CNN.com frontpage.  Sort of bizarre given that this is typically one of the prestigious cabinet posts (next to SecDef and State) and it's importance has been amplified by the financial meltdown and Secretary Paulson's incompetence.

Argghhh! PeP Links: Pirates Edition

Here is a piece from the Times Online (home of my favorite Car Writer, also Top Gear Host, Jeremy Clarkson) on the recent rash of, er, Piracy.

Somali pirates are demanding a $25 million ransom for a seized Saudi Super Tanker.

Here is an article that discusses difficulties the Yemenis have encountered with Piracy.

Matt Yglesias discusses the problems with policing piracy on the open seas, namely, the ocean is very, very big and ships aren't so big thus making policing cost prohibitive for many nations.  He also talks about how we screwed ourselves by encouraging the Ethiopian invasion of Somalia which has increased the lawlessness of Somalia.  A nation without order typically does wonders for breeding terrorism and piracy.  Who would have thought?


Here's a Boston Globe article on Peter Leeson (a GMU economist) who is obsessed with Piracy and its organizational structure (hint: democracy and workers comp).  Here is an academic article by Leeson fleshing out his take on Piracy and it's organizational structer.  Here's the intro:

"This article investigates the internal governance institutions of violent
criminal enterprise by examining the law, economics, and organization
of pirates. To effectively organize their banditry, pirates required
mechanisms to prevent internal predation, minimize crew conflict,
and maximize piratical profit. Pirates devised two institutions for this
purpose. First, I analyze the system of piratical checks and balances
crews used to constrain captain predation. Second, I examine how
pirates used democratic constitutions to minimize conflict and create
piratical law and order. Pirate governance created sufficient order and
cooperation to make pirates one of the most sophisticated and successful
criminal organizations in history."


Will the US Govt be Proud Owners of CitiGroup

Here is Brad DeLong advocating Nationalization.

Here John Hempton of the Bronte Capital blog details what the process would look like.

Here John Hempton explains why Sheila Blair (FDIC) tried to force an inferior deal between Wachovia (and for the taxpayer) and Citigroup as opposed to the resulting deal with Wells Fargo.

Thursday, November 20, 2008

The One Argument for the Auto Bailout

The one argument for the auto bailout that gains some traction with me is essentially as viewing it as a jobs program, or in other words keeping folks off the unemployment rolls till less turbulent times.

More on Autos

Over at the Center for Global Development they have a good post on how policy distortions (the light truck exception to the CAFE, tax subsidies to oil companies, and the smallness of our gasoline taxes) have led to our prevalence of non-fuel efficient cars.

Matt Yglesias makes the argument for congestion pricing in Urban areas.  He makes the point that those who would pay the fee ultimately are the beneficiaries as they experience less congestion and spend less time commuting.  Duh, but nonetheless it bears repeating.

The Wall Street Journal has an article discussing auto execs claiming for the umpteenth time that they can't go into bankruptcy because there are no funds availbe, thus they need the bailout.  This logic is maddening.  Supporters of the bailout agree with the fact that the Big Three need to be streamlined and reorganized.  They also agree that chapter 11 is an optimal means of achieving a reorginazation. They proceed to claim that Chapter 11 is not a viable option because of the lack of financing available, and then turn around and say that the Government needs to bailout the Big Three, or put in other words, provide the financing they are not able to obtain on their own in credit markets.  But if the government can provide the Big Three with funds for a bailout it could just as well provide DIP financing.  

More Appointments

Daschle for HHS, Penny Pritzker for Commerce, and Janet Napolitano for DHS.

Wednesday, November 19, 2008

More on the Big Three

Mitt Romney has a good op-ed on the proposed bailout. He opposes it and suggests bankruptcy and appears to suggest the government provided the Debtor in Possession financing.

Monday, November 17, 2008

Clinton Conspiracy Thoughts

I wonder if Obama's thinks Hillary won't be able to survive vetting, or namely, that the vetting would bring up enough juicy stuff on Bill that it might undermine her? This is all idle speculation and a bit stupid as she did seek to become President! However, the Hillary campaign refused to disclose their tax data or any donor information regarding the Clinton Global Initiative.

From Capitol Hill to Foggy Bottom

Hillary is slated to become the next Secretary of State.

The National Review

Here's an article on how the National Review has become increasinly crappy and hacktastic.

Chapter 11 for GM

The best argument I have heard for keeping GM out of chapter 11 is that they won't be able to obtain DIP (Debtor-in-possession) financing and thus will actually end up in Chapter 7.  However, if this is the reason why they need a bailout as opposed to bankruptcy couldn't the government provide the DIP financing?  Then you can sustain GM through the reorganization, and more importantly, a reorginazation in fact occurs.

Thursday, November 13, 2008

Stretching Those 15 Minutes

It appears that Joe the Plumber has a blog.

NHTSA Uses the Web

NHTSA, the National Highway Traffic Safety Administration, the kind folks who make your auto manufacturer issue a recall have created a free email subscription service where can keep tabs on whether your car has a recall or a technical service bulletin.  This is a handy feature if you own a Volkswagen like yours truly.

Saturday, November 08, 2008

More on the Franken-Coleman Recount

The Big Question, a Star Tribune blog, attempts to explain some of the newly appearing votes. This is where I have always thought the Democrats have shined in terms of shenanigans. Republicans subtract, Democrats add. I honestly think Franken will win at this point whether or not there were in fact enough votes in the first place as it seems the votes will appear one way or another.

Thursday, November 06, 2008

PeP Links: Transition and Conservative Crackup Edition

Transition:

Here is the bio on one of the frontrunners for the next Supreme Court vacancy.  When my employer (Uncle Sam) was being sued he was on the panel and had an excellent grasp of the record and asked really inciteful questions.

Here is the Scotus Blog with a more thorough list of possible SCOTUS appointments.

Here is a piece from TNR on Tim Geithner who is a short lister for the Treasury.  Larry Summers is mentioned also as a likely candidate.  I tend to think Summers has a greater chance if for no other reason than that Geithner is currently pretty busy as president of the Fed Reserve Bank of New York where he is playing a central role in trying to contain the financial meltdown.  Paul Volcker is another contender.


John Podesta, former Clinton Chief of Staff, is the head of the Obama transition team and is a candidate for energy secretary.

Conservative Crackup:

Here is a panel of conservatives on the conservative crack up and what to do moving forward. My favorite suggestion is Tucker Carlson's that we actually put forth a candidate that has demonstrates some degree of fluency in English.

Over at Culture 11 Conor Friedorsdorf proposes a series of panels to discuss the political challenges facing conservatism and possible policy responses.  I love the idea for the title- Conservatism- What the F-ck? (Obviously the liberal equivalent would be: Liberalism- What the Fuck?)

And This Just Cracks Me Up:

The boys over at Powerline demanding to know when Obama will back away from this whole global warming hoax.

More Loans for Big Three

Speaker Pelosi is apparently considering giving the big three another $25 billion in loans.  This is absurd, let them go into bankruptcy.

Wednesday, November 05, 2008

I Love Alaska

They haven't called the Alaska senate race but it looks like Ted Stevens won. Ted Stevens was recently convicted on corruption charges.

Recount in MN

Coleman is leading with a couple hundred of votes. Since the margin of victory is so small there will be an automatic recount.

The Most Unconvincing Spin Award

Goes to Robert Novak.  I love this quote in particular:  

"He may have opened the door to enactment of the long-deferred liberal agenda, but he neither received a broad mandate from the public nor the needed large congressional majorities."

I think it is clear that Obama has a mandate, what he does not have is much fiscal room to maneuver.  

Tuesday, November 04, 2008

Barack Obama Wins

Nobody has called it yet but it is clear that he will win in a walk. It has been clear for awhile but nonetheless people are paying attention tonight as if it were going down to the wire.

No Shame in Staying Home

I am going to go and vote this morning and encourage all of my readers to as well (that's five votes right there).  However, there is something of a fetish made about participation without any observation made regarding the quality of that participation.  If you don't pay any attention to politics, have no notion about our system of governance, or the candidates who are attempting to win your vote, maybe the best and most responsible thing you could do is stay home.  We have a very low participation in voting when compared to other developed countries, but there is also much wider spread apathy regarding governance.  Anyhow, here is an old fortune column from Greg Mankiw on the virtues of not voting for those that aren't terribly engaged.

Saturday, November 01, 2008

The Difficulites with a Homeowner Bailout

David Leonhardt has a good article on the difficulties surrounding a bailout for homeowners. Leonhardt believes a bailout will incentivize those underwater on their mortgage but able to make payments to conveniently fall behind. Such a plan does seem rife with perverse incentives.

Friday, October 31, 2008

Jeremy Clarkson on Motorcycles

Here is his review of a Vespa.  Here are two of my favorite bits:
"That said, a bike is much cheaper to run than a car. In fact, it takes only half a litre of fuel to get from your house to the scene of your first fatal accident. Which means that the lifetime cost of running your new bike is just 50p."

"I also liked the idea of a Vespa because most bikes are Japanese. This means they are extremely reliable so you cannot avoid a fatal crash by simply breaking down. This is entirely possible on a Vespa because it is made in Italy."

Thursday, October 30, 2008

Coleman Pulling Ahead

According to Rasmussen Reports Coleman has taken a four point lead.  The DFL made a massive mistake in nominating Franken.  Any boring liberal would have won this race in a walk.  Franken may still pull it out but his nomination was definitely a tactical error.  The minute he announced his candidacy the DFL should have tried to throttle the candidacy in its infancy.

Update: Here is some polling info on Texas.  McCain is clearly going to win Texas, but it also finds that 23% of Texans think Obama is a Muslim.  

Barkeley Running in 2014

For Governor of Alabama.  I love this part:

'"I plan on it in 2014," Barkley told CNN's Campbell Brown on Monday.

When asked if he was serious, the former Philadelphia 76er said, "I am, I can't screw up Alabama."

He added that his native state could only improve. "We are number 48 in everything and Arkansas and Mississippi aren't going anywhere," Barkley said."'

Move over Stagflation, Here Comes Stag-deflation

Nouriel Roubini, aka Dr. Doom, is predicting we are set for an extended period of Stag-Deflation, i.e. high unemployment matched with deflation as opposed to inflation which we saw in the 70s.

On a related note here is my co-blogger (on permanent hiatus?) Ilya endorsing deflation. 

Update: I hasten to add that I didn't see a damn thing in the 70s as I wasn't yet even a thought.

Fumes from the Fever Swamp

The newest bat-shit crazy rumor is that Obama is the illegitamite son of Malcom X. Anyhow, it would be badass would if Obama opened his inaugral speech with: "We didn't land on Plymouth Rock - Plymouth rock landed on us."

Tuesday, October 28, 2008

Bailouts for Everyone

The big three had been lobbying the government, and it appeared successfully, for a bailout ($25 billion in subsidized loans). But this is rich, GM wants $5 to $10 billion from the gummint to assist it in buying out Chrysler. Once it does this, it will axe most of the Chrysler workforce save those that manufacture Jeep products and their minivans and pocket the $11 billion cash Chrysler has on hand. I am not a fan of bailouts in general, and with respect to the auto industry there seems to be the least compelling case for a bailout.

If Chrysler or GM goes under, it would in fact hurt Michigan, and the autoworkers. But in the place of the corpse known as Chrysler or GM a "foreign" automaker such as Hyundai, Toyota, or Honda will simply build more plants in the South, increase shifts at existing plants, and churn out more cars which are better and affordable.

What also makes GM's claim to federal assistance for a merger less compelling is that Nissan appears willing and eager to acquire a stake in Chrysler. If one's concern is for the autoworkers, a Nissan merger would seem to be vastly preferable as there is significantly less product overlap between Nissan and Chrysler than between GM and Chrysler. Thus, Nissan would probably be less likely to cut as many workers as GM.

I find this type of thing noxious because it reeks of economic nationalism. That there is some support for such a bailout/merger seems grounded in the desire to keep an American manufacturer from being consumed by those awful "Feriners". However, with the auto industry this is especially stupid as where a company is headquartered has little relevance any more. A Toyota Corolla is every bit as domestic, or more so, than an F-150. It is designed here, the supplies manufacture here, and the car assembled here. So indeed, the Toyota Corolla is a "Japanese" car, but just as much as it is a product of Alabama or Texas or wherever else in the South they produce them.

Update: The $25 billion in loans to the big three have in fact already been approved. The $10 billion GM is requesting is in addition to the bailout they have already received. This is absurd. There is a reason the big three are in dire straits, they are run like a pension company with a side business in cars and their side business is piss poor.

Monday, October 27, 2008

Another One Bites the Dust

Ted Stevens convicted on corruption charges.

PeP Links

Oprah loves the Kindle.  

Greg Mankiw has an op-ed on the dearth of certainty amongst economists is going on and what will happen.


The plus side of a recession: Income Inequality diminishes significantly.  Not much solace though, as Len Burman points out "Only if you don't like rich people," says Len Burman of the Tax Policy Center. "It's not like their share decline brings improvements for the middle class or the rest of America."

More Chrysler

Daimler says that its 19% stake in Chrysler is worthless.

Friday, October 24, 2008

More Chrysler

Chrysler is cutting a quarter of its salaried workforce. 

Michael Brown Has A Blog

Yes, that Michael Brown.  As in "Brownie, you're doing a heckuva job."  As in the Michael Brown who went to an unaccredited law school, was Joe Allbaugh's college roomate, whose only previous management experience was at the Internation Arabian Horse Association where he was canned and was somehow appointed as General Counsel and then Head of FEMA.  That Michael Brown. Here's the link. Brownie, Welcome to the Blogosphere!

Scrapple


Scrapple is the nastiest shit ever, but it is also delicious. I had some this morning.  It is one of my guilty pleasures. Here is the wikipedia page for scrapple. Here is a brief excerpt:

"Scrapple is typically made of hog offal, such as the head, heart, liver, and other scraps, which are boiled with any bones attached (often the entire head), to make a broth. Once cooked, bones and fat are discarded, the meat is reserved, and (dry) cornmeal is boiled in the broth to make a mush. The meat, finely minced, is returned, and seasonings, typically sage, thyme,savory, and others are added. The mush is cast into loaves and allowed to cool thoroughly until gelled. The proportions and seasoning are very much a matter of the region and the cook's taste."

 Go out and try some.  

Thursday, October 23, 2008

Car Thoughts

I have a VW Rabbit and very much enjoy it.  However, there are two things about the car that drive me insane.  One, it has no MP3 input.  You can get one of those FM receiver things but they suck.  To get a dealer installed MP3 input would cost $500.  This is absurd to me.  The Rabbit/Golf is an economy car and its market is presumably younger folks who typically have an iPod or some other MP3 player.  In fact what’s the likelihood at this point that they have an iPod but no longer buy CDs.  That certainly describes me but I have a car that has a 6-cd changer.  Even now, in its third year, the MP3 input is optional.


The other thing that annoys me is that it is a hatchback but doesn’t have any hooks to tie down the back.  Yet again, your market is 20 somethings, most of whom are vagabonds making trips to ikea and target or pilfering their relatives for furniture.  Some sort of a tie down would give the car more crap hauling functionality.  You put in the iPod input and the tie down hooks and you are looking at maybe $50 in material costs and you have a more functional car, one that better serves its intended market.

Tax on Securities Transactions

I don't know why this hasn't occurred.  Presently there is a tax on securities transactions of .0033%.  Setting it at .5% would raise roughly $65 billion.  Such a tax shouldn't have a negative impact on US financial markets competitiveness as other major exchanges such as the UK and Hong Kong levy a similar fee.  Here is a CRS study on a Securities Transaction Tax.

Is Obama a Socialist?

So asks Scott Johnson at Powerline.  This shouldn't surprise me because the guys at Powerline do write some positively insane things and really do seem smitten with conspiracy theories. But, one way to determine whether Obama is a closet socialist is by looking at his proposed policies.  What do we find?  He wants to raise taxes!  Though, if we recall Milton Friedman's old saw, Spending=Taxes.  He wants to institute a pigovian tax on carbon emissions to correct for negative externalities, like that other well known communist Greg Mankiw, oh wait, he was Bush's CEA Chair.  He wants to expand the Earned Income Tax Credit, a program inspired by Milton Friedman's proposal of a negative income tax.  These are all center-left positions, not the onset of a new wave of socialism.  If you want to see socialism in action just look at what's happening with the current administration and the financial bailouts, as Brad DeLong put it: 

"The Bush administration, having entered office as social conservatives, leaves office as conservative socialists, proprietors of the most sudden large expansion of the state's role in the US economy since mobilisation for the second world war."

But one could also look to the policy advisors Obama has surrounded himself by. Jason Furman's selection as Economic Policy Director drew lots of flak because the left views him as an apologist for Wal-Mart.  Here is an online debate between Furman and Barbara Ehrenreich on Wal-Mart.  I hasten to add that Furman has proposed using the same vehicle for reforming the Health Care system as McCain, as chronicled here and elsewhere. Jeff Liebman is the co-author of the LMS Social Security Plan, the M and the S in the LMS plan are Maya McGuineas (former McCain economic advisor) and Andrew Samwick (former member of the Bush CEA).  One of the central elements of the LMS plan is partial privatization.  Very socialist indeed.  And of course there is Austan Goolsbee, of that strong communist foothold in the midwest, the University of Chicago.

Wednesday, October 22, 2008

Bachman=Batshit Crazy

I tend to agree with Michelle Bachmann, we really need to investigate some of these anti-American politicians. The Committee on Un-American Activities was a great success, if only marred by its limited nature. It sought only those who were commies, in a sense undermining its stated purpose. It was not the Committee on Commie-Activities, rather, Un-American activities. Anti-American activities encompasses people of so many different walks of life and persuasions, not just commies. Go Bachman, Go! Fight the good fight!

Bullshit aside, it has long been the official view of this blog that Bachmann is absurd, though I do think she is a fox. See this brilliant post by my estranged co-blogger, Anti.

Update: Here is Powerline trying to rationalize Bachmann's statements. And yet again.

Chrysler Preparing to Die

Chrysler (owned by the private equity firm Cerberus) is discussing mergers with GM and Nissan-Renault.  The GM merger doesn't make any sense to me, but is apparently the most likely merger scenario.  GM and Chrysler overlap significantly, almost completely.  GM has Hummer, Chrysler has Jeep.  GM's product lineup mostly consists of big crappy cars and trucks, same goes for Chrysler.  Neither company has any credible small cars in the market, both have horrible reputations for vehicle reliability.  At least in a Nissan-Renault merger there would be some areas where it would be mutually beneficial.  Nissan doesn't really have all that much in the way of truck offerings nor a succesfful minivan.  Two areas where Chrysler has actually done well with the Dodge Ram, Chrysler Towne and Country, and the Dodge Caravan. Nissan can provide a platform to Chrysler for the development of a credible economy car (no, the Dodge Caliber does not qualify).  It seems with the GM/Chrysler merger the basic idea is to more or less kill Chrysler and hope that GM is able to capture their old customers.

Tuesday, October 21, 2008

Read This

It's a goodbye letter from a hedge fund manager closing up shop.  It's hilarious.  Here's an excerpt:
"I will no longer manage money for other people or institutions. I have enough of my own wealth to manage. Some people, who think they have arrived at a reasonable estimate of my net worth, might be surprised that I would call it quits with such a small war chest. That is fine; I am content with my rewards. Moreover, I will let others try to amass nine, ten or eleven figure net worths. Meanwhile, their lives suck. Appointments back to back, booked solid for the next three months, they lookforward to their two week vacation in January during which they will likely be glued to their Blackberries or other such devices. What is the point? They will all be forgotten in fifty years anyway. Steve Balmer, Steven Cohen, and Larry Ellison will all be forgotten. I do not understand the legacy thing. Nearly everyone will be forgotten. Give up on leaving your mark. Throw the Blackberry away and enjoy life."

PeP Endorsement

As the only active contributor, I feel entitled to make the blog's endorsement.  The PeP blog is endorsing Obama, big surprise there.  

While a conservative, I simply cannot imagine McCain as President.  Or rather, I can, and this compels me to vote for Obama.  His impetuous nature simply renders him unfit to lead our nation in foreign affairs.  His unrivaled enthusiasm for war (read: singing Bomb, Bomb, Bomb Iran) is positively frightening.  His lack of knowledge on economic or other domestic matters is simply pathetic for a presidential candidate (such as the inability to credibly defend his health care plan) but also shows an alarming lack of intellectual engagement or curiosity. Such attributes have been in constant display by the current occupant of the Oval Office and to the nation's detriment.

I am not necessarily excited by the prospect of an Obama presidency combined with a Democratic majority in both chambers of Congress.  However, he clearly has the character and intellect to be President.  He will raise taxes, but ultimately they must be raised.  He will spend a lot on infrastructure, but such investments are overdue, and at least with Obama there is a chance that such investments will also include mass transit, and heaven forfend, there might be a more rational process in how these investments are made.  His committment to enact a cap and trade is less than optimal, but his preference for auctioning off permits is vastly superior to McCain's proposal of allocating permits.  And most importantly, Obama's signature foreign policy proposal is to wind down an ill-conceived war instead of doubling down on the existing one and launching a new one.

But further, as a Republican, I believe a loss is deserved on our side for the horrible mismanagement of the nation's affairs from Iraq to Katrina, the scaling back of our civil liberties, the rampant cronyism, politicization of the federal agencies, and deterioration of the nation's fiscal position.  The conservative movement, and the Republican party to which it has become so intertwined as to the point of oneness, has become intellectually and morally bankrupt.  A relevant conservative movement will need to develop ideas beyond the current platform of tax cuts, the politics of denial (climate change, income inequality, and the state of our health care system), gay bashing and conspiracy theories.  The conservative movement has failed to embrace this reality, hopefully a loss will begin a process of reevaluation.



Dining

Here is Tyler Cowen's Ethnic Dining Blog, a must for D.C. area residents.  Recently checked out Bamian, a very nice Afghan place. In general, for D.C., the way to go is Vietnamese (the Eden Center is always the way to go), Central American, Ethiopian, Indian, Afghan, and Bolivian.