Monday, March 30, 2009

Pragmatism or Populism

I am sick and tired of one or both of the above coming from Conservatives - WHO SHOULD KNOW BETTER.

Let me backtrack and lead you by the chin to the basis of my current disgust....

Last year, the financial markets began to crumble. The process was foreseen by those willing to look and ignore the anti-deniers ("You are just trying to talk down the economy. Look at the numbers, across the board the economy is strong and getting stronger.") No matter how much the voices in the wilderness suggested the foundation was rotten, cracked and sinking, the anti-denier argued the doom and gloom was unwarranted.

"The Washington Post had even run a column the day before Lehman's collapse ridiculing those who were making negative comments about the state of the economy."

Bear Stearns should have been allowed to fail. The die was cast and the 'moral hazard' argument won, too late though for the lesson to be correctly applied. Lehman Brothers was let fail and the repercussions scared the Politicians (probably the Fed too) into worrying that systemic failure would cause financial and structural collapse of the world economies. That belief is short-sighted and naive. Coming from the Fed and the Treasury, it can not be reassuring - and it is not.

With the failure of Lehman, no further failures would be allowed. Moral hazard was something that was 'academic', the Powers were dealing with real financial systems and real economies. Moral hazard lost it's ability to impose a check on improper behavior.

AIG. There are enough lessons for 20 or 30 books but the most important ones - from my perspective - are being ignored by many. I have said that freedom is messy. Bankers don't like messy. Especially when it comes to risk and any 'respectable' entity that tells them they can make risk less messy, more controllable is going to get a long look. AIG was offering financial managers a way to 'diversify and distribute' risk and this was paired with products that gave the illusion of AAA, almost Treasury safe, leveragable returns. How much AIG was involved with we will learn some time into the future, but my guess is somewhere around 45 TRILLION dollars of products/derivatives. With an exposure of .1 to 10% depending on the product, AIG had the potential to lose $450billion to $4.5 TRILLION. Obviously it did not have the ability to cover those losses and so their counter parties and clients would except....except. The Clients were people that were not free participants of capitalism. Most bankers are not and the financial markets have learned that they too dislike capitalism. See, capitalism can have winners AND losers. Win/win is not the normal of capitalist events. Risk means that there is a chance that investments fail. And despite AIG, failure was not only an option, but coming like an avalanche.

Who were the clients? Sovereign funds, hedge funds with 'serious' clients like Princes and National Banks. They couldn't lose...that was unheard of, and I think the Fed and the Treasury got a long lecture after Lehman about the viability of the American way of life if large holders of American Capital products in Europe, the Middle East and Asia were going to take big losses.

So, AIG would be unwound. It had to be done slowly, and the money would have to be given to make sure that AIG counter parties didn't get burned. The problem was, how much money? I am sure that AIG and others said that the markets were just disrupted and pricing products too harshly. If the markets could be calmed, the unwind could be done slowly with minimal losses...maybe less than a $100 billion. And if the economy had held on, that might have happened. But moral hazard has a dark side. It is bad enough to be caught violating it, it is much worse to be caught hiding that you might have violated it (regardless of the truth). The politicians and the Fed and the Treasury oversold the issue: imminent collapse, financial Armageddon. People shut down. The financial markets were houses of cards, one bankruptcy (AIG) away from disaster. People know people one paycheck away from disaster, they don't like to think of their national ECONOMY in the same position.

Like a tornado warning well heeded, people shuttered the windows, bolted the doors and headed for the cellar. Big ticket items died first as small stuff was stocked up on. What the financial markets feared was losses, what they got was rug pulled out of the economy.

How much of AIG is left is irrelevant. The multiple dips into the public trough put lie to all the claims that the situation was contained.

Now this is where I got pissed.

The Fed and the Treasury should never have bailed out AIG. Yes, I DO understand what the potential was, IS. YOU probably DON'T. 600 TRILLION in derivatives. The systemic failure of every major bank, most small COUNTRIES and a financial system a smoking ruin. Instead, we are going to burden the American People with bailing out anti-capitalists that believed they had a right to a free lunch - no risk.

And most conservatives are letting them get away with it.


Should never have been bailed out. But was. And that did NOT give us the right to interfere private enterprise. If I borrow $20 from you, you do not get the right to check my pantry for expensive soup, or publicly call me out for my spending choices. Our agreement for the $20 is the extent of your involvement.

I don't care about AIG bonuses AND NEITHER SHOULD YOU. It is NONE of your business and take that 'but it is our money' crap and stick it. Shareholders do not get a say in the day to day running of a business and the capitalistic system is either an all in, or get out choice. Since the 1930s, we have been trying to have it both ways and the more it is tried, the worse the situation is getting.

Capitalism, like freedom is messy. Too many conservatives have forgotten and have looked at their 401ks and home values and quietly, hopefully, they have encouraged the Obamas and Geitners and Bernakes to succeed so that they will not have to suffer from the risk THEY wanted to benefit from, but also be protected against.

Choice has consequences. Demand to be protected from those consequences and you lose the freedom of choice.

Too many are seeking protection and I am damn tired of it.

Sunday, March 29, 2009

Step One

Suspend all federal tax collections. No income tax, no business tax, no social security/medicare tax.

For one year.

At the end of the year, the Federal Government assesses each state the following:

$1.74 per acre
+ .35 per acre for debt reduction (not interest, principle)
$2.09 per acre

Credit to be given for all federally owned lands in each state.

No new taxes, no new income rates. $2.09 per acre. That's all.

Monday, March 23, 2009

Punch Drunk or....

I watched part of the interview of Barak Obama from 60 minutes and it almost seemed as if there was a smile ready to break out at every serious moment. Steve Kroft began to wonder about the state of mind of Obama, I am only wondering at what he was/is taking to 'take the edge off'. We know he smokes, the question I have is, what?

After the latest foreign affairs gaff, there is ONLY on question left concerning Obama's Administration and our President himself: Dumb, or Dumber?

Friday, March 20, 2009

Yea, what he said

Ok, regular readers (yea, right) know that I don't link too often. First off, I am too small a site to make any noticeable dent in someone's visits, but the primary reason is that I write here, for me. If people find it interesting, great.

Well, I have been saying for a long time that the gay community is it's own worst enemy and the Prop 8 issue in California is showing that in spades. In comments all around the blogosphere, you will hear gay people lamenting the activist gays apparent attempts at self destruction (self loathing?).

The idea that gay activists could stand up for Palestinians in the form of Hamas is so stunningly stupid that you have to wonder if it is actually alien provocateurs leading the community! No really. How could a gay activist support a group that would KILL THEM the second it got it's hands on them???

So, that said, I read a 'mainstream' blog today with a post that has said all that I have said, said it well, and gave it a big audience. So, you two over there, go read this.

Sunday, March 08, 2009


My youngest brother died yesterday. Eddie just turned 45 in January. It'll be a couple of days or so before we know why - but I had expected that when my Mother called, it would be to tell me he took his own life. It doesn't appear to have been that.

Eddie got a raw deal early and it haunted him. When he was 12 or so, he was taken to the doctor because he complained his legs hurt all the time (he was in Little League). Our family has a history of Muscular Dystrophy and doctor jumped to conclusions - it would be 2 years before things were straightened out but by that time the damage was done. Knowing what my parents did about MD, the later it hits, the more destructive it is - this was a death sentence for Eddie. For the next two years, he was given leeway to be/do almost anything - and he took advantage of it - as teenagers are prone to do. At 17 Eddie checked himself into rehab. More or less, things never really improved much from that point on. Shortly after that, his girlfriend got pregnant and both families tried to talk them both out of marriage. They got married and within a year moved to Austin where Eddie got a job from Diana's father. When his second son was born, there were complications and Eddie's response was to attempt suicide. His son was ok, Eddie survived a lame attempt.

A year or so later, they moved back to Chicago and Eddie got a good job and was very good at what he did (electrical construction). But it was rocky and Diana and he eventually divorced. As is normal for my family, Diana remained an important part of our family gatherings and the boys were regulars at my parents. Eddie struggled with addictions of one form or another and despite that, his employer stuck with him - he was just that good - when he was there, which was most, but not all the time.

Eddie met and eventually moved in with Cyndi. In many regards she was good for him, others, not so. Eddie abused the relationship and Cyndi hung on. Eddie would go to sleep and with minor bathroom breaks, sleep for days on end. He was delusional, psychotic at times. He got treatment, but didn't like taking the meds. When he went off them, it would 8 days of sleep out of 10, 2 days of delusional rantings. Through it all, Cyndi stayed with him. The boys got out of school - they are doing great.

Over the last year or two, things had improved, some. But it was always a fragile thing. I would hear that he was coming over to help my parents, but later learned he 'was down' and never made it. HE DID help Mom and Dad, a lot. He tried and when he was ok, we could enjoy a repartee that I had with no one else. He helped me when I built out the lower level - driving all the way here, worked for hours, and drove home again. Cyndi joined him and it was good.

So, it was a matter of when with Eddie, not if. He walked an edge with one foot almost always over it. Dad called him one of the finest electricians he ever worked with. He was outgoing, friendly, always willing to help. But his demons always seemed to lurk just below the surface.

Two days ago, he fell off a ladder. It didn't seem a big thing. Cyndi went out yesterday, Shawn noticed he was not very attentive. It looked like Eddie was 'going to be down' for a day or two. Shawn went out and Cyndi came back in the early evening to find him sprawled on the bed.

The demons probably didn't do it. Accidents happen. Eddie burned the candle at both ends for many years and he was physically much older than his years. Unlike the raw emotions I had with Billy, Eddie's death is a little like relief - certainly not for us, for Diana, or Cyndi, Shawn or Matt, or my parents. For Eddie. I am very glad it did not appear to be at his own hand. That will not give much comfort but it does mean that Eddie persevered. He didn't give up. No matter the demons, no matter the trials, he faced them.

Eddie got a raw deal and it finally caught up with him. I take no comfort in his death - I will miss him. But, he and Billy can get along and keep each other company. They both died way too early, but long after they were expected to.

Rest my brother. This time, it will be a good sleep.

Friday, March 06, 2009

Speed of Change

For many years I have held the notion that change is a good thing - that without change, life stagnates, that life fails. Obama's mantra of change obviously would resonate with that notion - if I thought for a second he actually meant change in the same way that life changes - grows, matures, evolves. He doesn't. He means that he is going to change what works into something that is more defensible to the elites of Europe. That is not a throw-away snark. Many in Europe - and here in our academic circles believe that 'socialism' style economic and political policies can work provided three things: everyone buys into the change - even if that means forcing those that disagree to adhere; smart enough people are in charge - the right kind of smart; and there is a willingness to spend any amount necessary, from anyone and everyone necessary, to provide the means to establish the necessary changes.

They are wrong. But evidence and facts are insufficient to prove they are wrong. Argue that every attempt at socialism has failed and one of the above 3 items will be used to explain why it failed - but never, at any time, will proponents admit the fundamental flaw with socialism - the need will always exceed the ability.

It would be easy to say that uneducated people will buy into the socialism concept because they are the ones most likely to benefit (they are not), but it more commonly appears among the educated - those that should know better. Maybe they do, maybe they think that the first step, getting everyone to buy into the concept is the most important step. To succeed, they need a majority of voters to give them the chance - Obama asked for that chance, and a majority have said ok.

It is doomed to failure. I know it. Most of the people (all three of us) that read this know it. Most conservatives know it. Not in a general, belief way of knowledge - but in the cold, hard knowledge that comes with viewing the killing fields, the mass graves or the daily news from Venezuela.

Which brings me to today. 45 days after his inauguration, the number of areas where the failures of this President are becoming obvious to even the deaf and blind has reached the point that I have to ask - how much longer can this go on?

Obama and his Secretary of State are proving to the world that the United States will not longer be a superpower. We are going to unilaterally show to friend and foe alike that change has come and a kinder, gentler, pussy whipped, emasculated foreign policy will be laid at the world's feet on bended knee. Someone is going to, in Joe Biden's words "test Obama". The response - clearly from the last 45 days - is going to be painfully obvious to everyone, wrong.

Obama and his Treasury Secretary are acting as if the economy were an economic lesson. Most of you will not understand, so let me explain. When academic economists talk about policy changes and macro-economic behavior, they will begin their discussion such: "If you enact this change, and all other factors remain the same, THIS happens." As an intellectual, academic exercise, it is interesting to note how changes introduced to a system can effect results. You can take a model of our economy and introduce change to one variable at a time and see and tweak the results til you get the situation you are seeking. Unfortunately the real, messy, shifting world does not work like an economic model. Every policy proclamation is reviewed, analyzed and acted upon by millions of economic actors. All the other variables DO CHANGE. Often quickly, sometimes, instantly. So we have a President and a Treasury Secretary promoting economic changes in isolation. This policy will have this result; that policy will have that result. And neither has an impact on 'unrelated' matters. This is why 'the market's up and down gyrations' are not of concern - they are unrelated to the policy pronouncements. It is an academic blindness and it is destroying wealth daily.

To those of us grounded in the real world, we look upon the actions of this Administration and wonder - can they be this stupid? They can't, can they? They don't REALLY want to destroy the country, they can't REALLY think that their plans will work. Obama really, truly believes that his policies will work. I believe that. I believe that he has surrounded himself - loosely and inefficiently - with people that believe his plans and policies are GOOD for the country AND the planet.

They are wrong. Freedom is messy and economic choices and behaviors do not stand idly by as 'variables' are tweaked. But here is where I am starting to get worried. 45 days. In 45 days Obama has done more damage than just about anyone could imagine (I figured he could and would do it, just that it would take most of this year to do so - wrong).

Virtually every action Obama has taken, directly with his words and policies, and indirectly by his Cabinet members actions in their arenas, has made everything worse that it should have been.

I know this - I lived this one afternoon at the radar scope of an Air Force GCA when I screwed up with 6 flights - every action, taken by itself, was correct, legal and responsible. Taken as a whole, I put 14 crews in deadly danger. It was my last day as an Air Traffic Controller.

In 45 days, Obama has set a course of events into motion that is dangerous beyond his, or his advisors, understanding. 45 days. He has over 1400 days still to go. 1400 days. Can ANYONE imagine 1400 more days like the 45 we just had? Can anyone imagine where we will be in 100 days? This is the question that plagued me today - how much longer can we continue AND what happens when what is painfully obvious to many of happens - a crisis where the President, and ONLY the President, can and must act.

President Obama campaigned on a promise of change. The speed at which he is trying to implement his change is dangerously out of control, and he doesn't, or can't, see it. Where we go, and how long it is going to take us to get there, is happening faster than most of us could imagine. Speed kills, and our Country is in danger.

Thursday, March 05, 2009

I want Obama to fail

Sent to my Congressional delegation (Sen Kohl, Sen Feingold, Rep Baldwin)this morning:

With all the bruhaha going on about Rush Limbaugh's statement hoping for the failure of President Obama's policy I wanted to make a comment to my Congressional delegation:

Given the policies and plans proposed and supported by President Obama, I hope they fail as they will neither help our Country's current economic situation, nor benefit our Country in the long term. If you support his policies, then I hope you fail also.

Just to be clear. We have heard this before. Remember?

Support the troops, not the mission.

I support my President, not his policies or plans for this country.