Monthly Archive for September, 2008

The Pure Dude and Fug Act

As the repercussions of the latest Chinese tainted food scandal continue to be felt, it is worth noting to any neighborhood ideologues that there IS a difference between good regulations and bad, and that you fail a pretty basic critical thinking skills test if you can’t tell that on sight. The fact is, in a commercial state of nature, companies will act like cavemen and do pretty much everything they can get away with to make a few more pennies. Chinese businessmen killing our pets and their babies with bad food, or Wall Street committing mass suicide should be a strong hint that regulation can be a good thing…

…A Republican president got the Pure Food and Drug Act passed, but that part of the party is deader than Elvis. It’s a shame.

Jurassic Palin

As per the Huffington Post:

Soon after Sarah Palin was elected mayor of the foothill town of Wasilla, Alaska, she startled a local music teacher by insisting in casual conversation that men and dinosaurs coexisted on an Earth created 6,000 years ago — about 65 million years after scientists say most dinosaurs became extinct — the teacher said.

…Palin told him that “dinosaurs and humans walked the Earth at the same time,” Munger said. When he asked her about prehistoric fossils and tracks dating back millions of years, Palin said “she had seen pictures of human footprints inside the tracks,” recalled Munger, who teaches music at the University of Alaska in Anchorage and has regularly criticized Palin in recent years on his liberal political blog, called Progressive Alaska.

…The only thing disturbing about this, I mean beyond the fact that, as Matt Damon said, that she could have the nuclear codes, is that I remember thinking that Dan Quayle was going to be a deal-breaker too, but he wasn’t. I Guess that had more to do with the anti-charismatic Mike Dukakis, but still…

The Butterfly Manifesto #3 (On the Bailout “No” Vote)

By Andy

“Damn it, Steve … I’m a lawyer, not an economic theorist!”

Noting the above, understand that I don’t represent that I’m an expert on economic theories and how the bailout (or lack thereof) will affect Main Street or Wall Street. I can tell you that this whole mess has been fascinating to observe because it seems to have made strange bedfellows of George Bush and the Democrats. Could anyone, even 30 days ago, think that the Democrats and W. would team up on anything … and the House Republicans would stand in the way of approving such unholy work-product?

Aside from the grand theater that the bailout has represented, most Americans are not in favor of the bailout for the wholly conservative notion that taxpayers shouldn’t shoulder the burden of bad bets by Wall Street millionaires. And I mostly feel the same way, except for the fact that some of these bad bets put first-time homeowners in a home. But there is a deeper issue that may necessitate some form of bailout. I refer to the short term credit problems that is one of the resulting effects of the economic crisis.

My understanding is that in the past few weeks, short-term loans have become increasingly difficult to acquire for small businesses. As Jayne O’Donnell of USA TODAY wrote on 9/19 ,

Retailers typically fund their businesses with short-term lines of credit and long-term loans that usually require the company to meet certain financial conditions. If they don’t meet them, the banks can call in the loans. Retailers also can borrow for the short term against money due from customers or against their inventory, or for the long term by issuing bonds.

If I understand this correctly, retailers who don’t have long-term lines of credit set up, could be faced with the crushing issue of how to make payroll and/or pay for the operational costs of running their very large business. Extrapolating this to its logical small-business counterpart, the potential effect is sudden and widespread unemployment as these entities (which are understandably cash-poor) are shut down or at least placed in operational suspension as their ends don’t meet.

If all of the above is true, we are not looking at the second coming of the Great Depression, but we are certainly looking at teetering on the edge of a solid recession.

I invite your comments and corrections. The problem with government today, is that no one understands the remedies which are being applied to fundamental problems in the economy … including (potentially) the lawmakers who fix them.

A final slightly unrelated note. With JP Morgan now acquiring the assets of Wachovia, now is a good time to pick up a very high 1-yr CD with a teaser 5.00% APY offered prior to Wachovia’s collapse. Thanks to Bankaholic.com for that email newsletter .

Andrew Baharlias

Living In the World That Cried Wolf

I’ve seen the lack of public appreciation of the bailout bill described as a failure of communication by the Bush administration. Actually, it’s a consequence of their communications successes in the past. By now the ginning up of the war is well known, with its planted stories, cheerfully manipulated journalists, false data presented to the UN, and Condi Rice on TV talking about smoking guns and mushroom clouds. Throw in a few color-coded terrorism alerts that seemed transparently timed to the political news of the day, an overreaching treasury secretary who initially sent up a bill that insisted (again) that this most despised and inept of all administrations should be beyond all review or oversight, and natural skepticism on the subject of robbing the poor and middle class to feed the rich, and you have a public that just isn’t going to buy the urgency of this, even if the claim may be legitimate.

Nothing Ever Changes and No One Ever Learns Anything

The indispensable Glenn Greenwald on how the bailout follows 10 normal principles for how government functions:

(1) Incredibly complex and consequential new laws are negotiated in secret and then enacted immediately, with no hearings, no real debate, no transparency…

(4) The Government begins with demands for absolute power so brazen and absurd that anything, by comparison, seems reasonable….

(6) The people who run the Washington Establishment are drowning in conflicts of interest. Hank Paulson let Lehman Brothers go bankrupt while intervening to save AIG, only for it to be revealed after the fact that Goldman Sachs — Paulson’s career-long firm of which he was Chairman until just a couple years ago — would have lost $20 billion had AIG failed.

…And on the failure of the bill to pass the House:

What seemed to happen is that enough members were afraid of the extreme public anger against this bailout bill and petrified of what it would do to their future job security. That’s a good thing — it’s called responsiveness and accountability.

As I wrote earlier, something needs to be done. Fortunately, a flawed bill or no bill is not the only choice, though no doubt it will be framed that way. Anyway, the rest of Mr. Greenwald’s piece is insightful, as usual.

Government by GMS III

Nate Silver has a good post on just who voted against the bailout bill and their transparent reasons why. I am reminded of an old mantra of George Steinbrenner’s: “Lead, follow, or get out of the way.”

[Edit] Adding the clarification that I don’t think it a bad thing that the bill failed if it gets us a better bill. While I do think the credit market needs some propping up, the bill as written allows far too much latitude to the Treasury secretary as to setting prices and which assets to buy. Not only does it make him inordinately powerful, not only does it force us to put uncommon faith in his judgment (both the current guy and his post-January replacement), but it makes him the most corruptible figure this side of Russia. As Bob Dylan sang, “Don’t follow leaders and watch your parking meters.”

A Great General

It occurs to me that the adjective “great” should only be applied to a general retroactively. Do it in mid-career and you might get Julius Caesar hauling his legions into downtown Rome or Douglas MacArthur heedlessly charging his army up to the Yalu River in contravention of presidential orders, or even Robert E. Lee ordering Pickett’s Charge. Delusions of grandeur in a military leader (or any leader, one supposes) are a bad thing to provoke. (H/T Eschaton)

Things We Read Today (Old Stuff Edition)

“…The Great Depression brought into question all the basic assumptions of the American society. The single issue with which it confronted the nation was one of primary purpose. Which should have absolute preference–the social welfare of all the people, or the maintenance of a social situation in which, under normal circumstances, the greatest possible profit was assured to private enterprise? Most Americans had always assumed that social welfare was contingent upon the prosperity of private enterprise. But the Great Depression generated a widespread suspicion–despite the oracular pronouncements of statesmen, bankers, and industrialists–that this equation was not an axiom handed down by God.” –from, “Postcript to Yesterday: America in the Last Fifty Years,” by Lloyd Morris (1947).

“I gave up looking forward to anything seven years ago, and I’ve got along all right that way.” — John Van Droten, “The Voice of the Turtle.” (1944)

The Butterfly Manifesto #2: Debate Reaction

By Andy

Despite the seeming unanimity of the post-game polls, there was no clear “winner” in the debate Friday night. This could be considered a major win for Obama. Running out of time and options with which to take back the lead, McCain needed to appear as a commanding statesman and instead appeared as a peevish, somewhat crotchety senior. If there is a resultant large bump in Obama’s favor, it might be a sign that the American public is finally connecting with the man the way I connected with him after reading his books—or that they’re disconnecting from McCain. In either case, there is an excellent chance that this race could be over.

Even with the negative vibes, McCain still marginally held his own on the subject of the economy by resorting to the old trick of focusing on a trivial matter and repeating it ad nauseam until it seems like a serious matter. Pointing out Obama’s pork-barrel requests on at least 3 occasions in the span of 2 minutes is what I am referencing. Almost simultaneously, McCain seemed out of touch when he interjected his proposal for a $5000 tax credit for health insurance. Obama could have responded that any person with a preexisting condition searching for health insurance on the open market would not be helped by $5000. Failing that, he still succeeded in undermining McCain’s pork-flavored tirade by contrasting $18 billion of pork to the $300 billion in tax cuts McCain is offering to the wealthiest corporations and persons in the United States. It was a surprisingly brilliant response from a Democrat—they normally focus on refuting the attack rather than refuting the point—and it reflected Obama’s longstanding position that the citizens of this country are not stupid and can make objective, rational decisions if given the proper facts.

Still, in spite of Obama’s excellent retorts on some issues, he may have lost ground on others because he was far too deferential. He began by thanking McCain profusely on camera (but prior to the debate beginning) for just showing up, and then continuing his affability by stating, “I agree with John on…,” or “John is right on…,” Obama may have missed the memo warning him that agreeing with your opponent mostly nullifies anything you may say after the concurrence. How many times did McCain agree with Obama? Zero. McCain’s bombastic pugnacity may have nullified this effect to some degree, but if continued into another debate it may begin to resemble passivity.

In this debate the American people were given an opportunity to see each man for the first time as would-be President. I’m biased, but Obama just seems more presidential. He’s intelligent, articulate, conveys strength, passion and a genuine desire to change this country for the better. McCain is presidential in his own way, I suppose, but it seems as if his time has passed. A McCain presidency ending in 2008 might have been better than the last eight years of hell (if one is to believe that he would have kept to his moderate Senate record prior to 2005); however, a McCain presidency that would begin in 2009 would be an instant anachronism.

Andrew Baharlias

Running for the Approval of J.F. Cooper

From Entertainment Weekly’s interview with Jon Stewart and Stephen Colbert:

STEWART: I keep hearing that she’s ”like us.” There’s this idea that people who hunt and have ”good” values are somehow this mythological American; I don’t know who ”this” person is, I’ve never met them. She is no more typical ”us” than I am, than Obama is, than McCain is, than Mr. T is. If there is something quintessentially or authentically American about her, I sort of feel like, you know what? You ”good values people” have had the country for eight years, and done an unbelievably s—ty job. Let’s find some bad values people and give them a shot, maybe they’ll have a better take on it.

The equation that says that to appear authentically American a politician has to kill defenseless animals is something I’ve always wondered about. I live in the wrong part of the country to run into Natty Bumppo on a regular basis, but does anymore? Picking a state at random, Wal-Mart has 12 stores in Montana, which gives them roughly one store per two residents of the state. They have 11 in North Dakota. These people are not surviving on beaver meat. Sure, there are recreational hunters, but there are recreational bowlers too, not to mention recreational bird watchers and other non-lethal nature lovers. (Quintessential American-with-a-gun Theodore Roosevelt swore off blasting at potential specimens when the box camera came along. Of course, by then he had already killed at least one of everything that walked, crawled, or flew, so maybe it wasn’t that big a sacrifice.) Heck, there are recreational pornographers, too. What makes a hunter more prototypically American than those people, or all those folks buying frozen dinners at their local super-store? This is a myth to which we give far too much credence. One suspects that if we stopped catering to it, it would simply vanish.

Besides: the bowlers… they need some attention too.