America's Next Tarp Model

What I just love about Jon Stewart is that he perfectly projects the non-partisan, "They did WHAT?" amazement that so many of us feel about the government's economics programs. ANYTHING could be said at this point, and we would believe it. We might break a pencil, but we'd believe it.

The Daily Show with Jon Stewart
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UPDATE: As much as Jon is having here, it is useful to point out that the actual amount, by any reasonable accounting standards, was far less. And one can't really say it was "secret," as much fun as that is to say. The painfully earnest (but scrupulously correct) Jay Hamilton explains why these two things are true.

Appropriations Committees: Nein, danke

Wow! People are turning down Appropriations Committee assignments? That's pretty amazing....

(Nod to @tofias)

MM on WAMC, With Allan Chartock

A (let's call it) "wide-ranging" interview with the very nice and interesting Allan Chartock, on WAMC's Northeast Public Radio. A huge audience, by my standards, on dozens of stations in MA, NY, and etc in New England.

My Cuomo bashing had started here....

And then used this way....

I was glad to get to clear this up in the interview. Andrew Cuomo did NOT cause the financial crisis. George Bush, Barney Frank, and Chris Dodd caused the financial crisis. Andrew Cuomo only helped. (Listen to see why I think so!)

Stimulating, Stimulating--"Push the Private Sector"

Near the end of his truly terrible pop song, "I do the Rock," Tim Curry starts mumbling to himself, "Stimulating....Stimulating..." (Video, if can stand it). Makes me think of the Porkulus package.

Here's a terrific example, sent in by Jason S. JS writes: "[Here] is a hyperlink to how the San Antonio transit agency is going to fund their match for more federal funding for a street car application to the Feds. Clearly this shows how stimulus money is fungible, or laundered if you want to be more crass. It also demonstrates that the transit agency is not spending any more money at all in the short run and its essence is to shift funding to lower return investments for the public, but higher returns to the transit service providers. I am sure that this is not the only example of such behavior but just a good example.... "

Excerpt from the article:

VIA President Keith Parker has said his agency would commit $20 million from its capital budget. Because of federal stimulus funding VIA has secured to buy new buses, the transit agency can divert the money from its capital budget for use on a streetcar system.

Officials also underscored the need for help from others.

“The mayor and I feel very strongly that we need to push the private sector,” Wolff said.

A public improvement district could be formed that would levy an additional tax on property owners within a certain distance from the track alignment. The private sector helped fund the streetcar line in Portland, Ore., a model for other cities seeking streetcar programs.

So, they got "Federal money" (whatever that means). They are moving "city money" from one line item to another. And all this spending of tax money is an excuse for... raising taxes! If you look at a taxpayer, how do you tell if she is a Federal taxpayer, or a state taxpayer, or a city taxpayer? The answer is, "YES!"

Bonus link: The Transportation Department is now exempt from worrying about things like costs and benefits. Instead, the goal is to improve "livability." I think that means that people with Volvos also to get to ride street cars at public expense.

WE WANT OUR CHANGE BACK!

Suppose I go to a baseball game, with my teen-age son. I've just been to the bank, and the smallest bill I have is a $100.

I send my son up to get two hot dogs, some peanuts, and two diet sodas. I know that costs maybe $18.

He comes back with the stuff and sits down. I ask him for the change. He looks at me like I'm crazy. "That money is going to be spent on other things! That's leftover money!"

What would I do? I'd grab him by the belt, and shake the money out of his pockets! That's my money! I want my change back. I WANT MY CHANGE BACK!

That's what we should be telling President Obama about the TARP money. I WANT MY CHANGE BACK! Obama and his bunch of geniuses in Congress said they needed our money, that there would be a DISASTER unless we gave them a $1 Trillion bill. Maybe that was true, maybe it wasn't.

But we gave them the trillion dollar bill. AND THEY DIDN'T NEED IT ALL.

WE WANT OUR CHANGE BACK! It is outrageous that they are keeping the change, just so they can spend it on something else.

Tell the President: WE....WANT....OUR.....CHANGE...BACK! Apply the money back toward the deficit, don't treat it like a high school kid at a baseball game, on the equivalent of cotton candy and corn dogs.

A Rant, and A Movie Review, Sort Of

I went to see Michael Moore's "Capitalism: A Love Affair" a few weeks ago, working for WPTF radio. And, I actually thought it was pretty good. Funny. And the middle part was excellent, really first rate. MMoore smashed four people who needed smashing. Those four? L. Summers, T. Geithner, B. Frank, and C. Dodd. Two economists, a narcissistic goofball, and an unprincipled drunk, in that order.

But then I read something by the good DeLong. And it struck me....well, here's my rant:

Folks, there is a contest out there for who understands economics better. The contestants are Dr. Brad DeLong, econ prof at Univ of Cal-Berkeley, and....the filmmaker, Michael Moore.

Almost unbelievably, and frankly *I* can't believe I'm saying this, the winner is....Michael Moore.

Dr. DeLong is fussing and moaning that a few people have finally come to their senses, and (as he puts it) "dug in their heels" on the enormous deficit. As it stands, folks, combining the state and federal government deficits for the next two years, what we already KNOW about, each working person in the U.S. owes well over $100,000, mostly to the Japanese and Chinese, who have bought our bonds, our debt, our Treasury bills.

(Editor note: "working person" means people with jobs. There are only about 150 million working people in the US. The projected debt of the feds is about $70k / worker, and the states is about $30k / worker)

But Dr. DeLong thinks that is not enough! He is clearly disdainful of those of us who are worried about selling our country, about mortgaging the birthright of our children. He says that if we have one more, just one more, bad economic downturn we may now have a return of the Great Depression. DeLong puts the probability at 5%. What he wants to do is to spend our way out of the recession, but he is not sure we can, because our deficit is so big.

Amazingly, Dr. DeLong cites a discredited theory, a theory no real economists believe anymore. Again, I can scarcely believe this, but DeLong bases his argument on the so-called "Phillips Curve," the theory that unemployment can be driven down by increased inflation.

Folks, this theory has been debunked, and debunked, and discredited, yet policy makers still want to use it. I can cite you a whole fistful of Nobel Prize-winning economists who have proved, absolutely proved, that announcing you are going to use inflation as a policy NEVER reduces unemployment.

So, Dr. DeLong gets an F: back to school, sir!

On the other hand, and I can't believe I'm saying this, either: Michael Moore, in his new movie, gets the cause of the crisis, and the damage of the bailout, about 75% correct. A solid C, for Mr. Moore, a gentleman's C.

Who is to blame? It is clear in the movie, if you watch "Capitalism: A Love Story." The cause of the financial crisis, Mr. Moore is very clear, the men at the center of the financial crisis are....the guys who are now the Obama economic team, and the people in Congress who want to blame everyone but themselves.

Michael Moore lines them all up, and skewers them: Tim Geithner, now head of Treasury. Larry Summers, now Director of Obama's National Economic Council . And, this is the best part, he also goes after people in Congress. Chris Dodd, the Senator from , and Barney Frank, the guy who forced our banks to make all those bad loans to people who couldn't pay them back! Barney Frank, the guy who knocks down old ladies if they get between him and a microphone, and who wants to blame Wall Street....Michael Moore shows how Barney Frank helped cause the crisis! It's delicious.

The point is that the only thing we have to fear is, Porkulus itself! DeLong wants us to spend more, to increase the deficit. But we can't do that. Because, as none other than Michael Moore himself showed, all that TARP money, all that Porkulus money, was wasted, thrown away, poured down a rathole.

DeLong is right about one thing: if we have another crisis, we will really be in trouble. Because we won't be able to bail out Wall Street again. But the reason is that we already spent too much on a useless bunch of policies. We spent like drunken sailors on shore leave. I'm sorry, I take that back, it's an insult to drunken sailors.

The bottom line is unbelievable! Michael Moore gets it right, at least for about ten minutes of his otherwise terrible movie. And Dr. Brad DeLong, a Berkeley economist, gets it wrong. The Phillips Curve is dead. Let it rest in piece, Dr. DeLong.

Whew! I feel better now.

Help! Tyler made my head explode

When he referred to this post by Krugman as one out of "two of the best recent economics blog posts, in some time." In fairness, Tyler did do some basic CYA by noting in parentheses that he wasn't sure if he agreed with the post.

So lets break it down, KPC style:

"From various bat squeaks I’ve put together a view of what I think lies behind the surprising — and damaging — deficit squeamishness of the Obama administration."

Ok, so we start off with a double WTF. Bat squeaks? Is he making fun of Larry Summer's speaking voice?

And what is this about the "deficit squeamishness" of Team Obama?

People, the fiscal 2009 deficit was $1.4 trillion! And thats not just a one time, caused by the recession, deal. According to the CBO, the deficit in 2019 will also be over $1 trillion. Plus Team Obama seems willing to sign on to a health care reform bill that will in all probability further raise the deficit beyond current projections.

I am sorry Paul, but I just don't see any reluctance of the Obama administration to run big deficits.

Krugman then claims, without any supporting evidence, that the main reason why we are running such tiny, puny, pusillanimous deficits is that the government believes that further borrowing could cause long term interest rates to skyrocket because it would unwind a sort of carry trade going on where people are borrowing at ultra low short term rates and lending out at higher long term rates. As he puts it:

"Well, what I hear is that officials don’t trust the demand for long-term government debt, because they see it as driven by a “carry trade”: financial players borrowing cheap money short-term, and using it to buy long-term bonds. They fear that the whole thing could evaporate if long-term rates start to rise, imposing capital losses on the people doing the carry trade; this could, they believe, drive rates way up, even though this possibility doesn’t seem to be priced in by the market."

PK thinks this is a dumb argument. So do I. However, I don't happen to think it is why our deficits are what they are (which to PK is small, but on planet earth where I live, it is fairly large).

People, if Team Obama really wants to run a bigger deficit in theory (which we have no real evidence that they do), but are not doing so in practice, the reason why is much more likely to be that they fear the political fallout from all of us irrational people who would object to such a policy.

I actually agree with Krugman that the government could borrow a lot more money without any directly adverse macro consequences in the short to medium term.

I just didn't see anything in the way the original stimulus bill was constructed and implemented that would make me believe that another round of stimulus from the same set of players would do much for job creation or help put our economy on a sustainable recovery path.

I was wrong.....

Okay, so I was pretty much wrong. For anyone familiar with my predictive powers, this is hardly a surprise.

But I fussed about the German "euros for junkers" program, the Abwrackprämie.

This program, as often reader (and Berliner) Florian pointed out, was singled out as being pretty impressive, as these programs go.

And, I have to admit that they are right. The Abwrackprämie is relatively inexpensive, it is NOT protectionist, and quite a few folks bought cars. I would stand by my claim that its environmental claims were exaggerated, and in fact simply false. But, as they programs go, it was only mildly nuts, not completely insane.

For completely insane, you have to go to the US program.

My favorite part: The House "leadership" is saying, "What? We ran out of money already?" I think we are going to be hearing that a LOT in the next few years.

Pretty good interview with Mike Pence.

Note From An Old Friend: Credit Markets Need Some Fiber

A note from an old friend in high school. Interesting perspective. Disintermediation is a disaster.

Dear Mike:

I’ve been in the RV business for 29 years now, and I own Travel Country RV center along with my business partner.... We have 3 stores located in Lake City Florida, Valdosta Georgia, and Augusta. And I can tell you that this is the toughest market I have ever seen, and I see no signs of improvement. We’ve lost our floorplan financing which was a credit line of $15 million and don’t know if we can replace it. The only two major players left are Bank of America, and GE and you know what’s been going on with them. So here we are, that small business that everybody talks about, and we’re on the verge of going down the drain just like so many others, and the government is doing nothing to help us. All the bailout money and stimulus, and we can’t get banks to lend to dealers for inventory, and we can’t get banks to loan to customers without making the conditions so unbelievably unreasonable that we lose 50% of the deals we write now. We’re hanging in there, and liquidating our inventory and hoping that something happens that will loosen this market up but it’s not looking promising, as your article so clearly points out.

He's referring to the Limbaugh Letter interview. It's not available without a subscription, but here is an excerpt:

What a pleasure to speak with the very insightful economist Dr. Mike Munger — chair of the political science department at Duke University, North Carolina’s 2008 libertarian candidate for governor, and all-around brilliant guy:

RUSH: Dr. Munger. I’m really looking forward to this — thank you for making time here.

MUNGER: I’m glad to speak to the leader of the entire conservative movement.

RUSH: (Laughs) First, I want to go back to something you said a while ago, and then ask you to update it. You had an interesting analogy from Milton Friedman to describe Obama’s economic policies: you said it’s like steering a huge ship with an old rubber band for a steering cable; the cable stretches, it gets hung up, and you turn it and turn it, nothing happens; finally it does turn, you go too far, and then you turn it back and you can’t stop it. Can you relate what you meant to Obama’s stimulus and budget, and whether things have changed since that analogy?

MUNGER: Milton Friedman, the Nobel Prize-winner in economics, said that there were two problems with monetary policy. One, people might not want to do the right thing. But even if people want to do the right thing — the Federal Reserve, the fiscal
policies of the federal government — the economy is like a giant ship; it takes a long time to turn it. But even worse, in our attempts to coordinate economic policy, the steering cable is like an old, stretchy rubber band. So if we turn one way, the ship does nothing for a long time, maybe months; and we pour in more and more
resources, and it looks as if nothing’s happening, and so we start to try to do too much. Eventually, the great ship of the economy starts to respond. But as it starts to turn we say, “Okay, okay, that’s enough,” and we start to turn back the other way, but nothing happens.
Now, in the time since I originally talked about that analogy Milton Friedman made famous long ago, the high-powered money supply of the United States has been growing at a rate that we haven’t seen I think ever. It’s grown at a rate of ten percent per
month over the last six months.

RUSH: Which means we’re printing money, right?

MUNGER: In effect, we’re printing money. We’re raising the pressures for inflation, to the point where there’s no way we can stop it. Once the ship does start to turn, we’re going to have inflationary pressures the likes of which we have not seen since the ’78, ’79 huge increase, which was then due to the Arab oil embargo. This time, we’re doing this to ourselves. I would say two or three years from now the inflation rate is going to be at least 12 or 15 percent, and it may be higher. We can’t turn that fast, and we’re trying to turn too much too quickly. We don’t know what we’re doing; we’re as likely to make things bad as good. But the one thing that we do know for sure is that there’s going to be a period of inflation.

Tea Party: Raleigh

Deficits are Future Taxes

Stimulating Discussion

My man Nick "I have lots of black clothing" Gillespie has an interesting piece in the print edition of Reason this issue.

Lots of different folks, including KPC pal Mark Perry. Oh, and including me, too.

Communication, Threats, and Laughter

Homo Politicus and Argument (Nearly) All the Way Down: Persuasion in
Politics

Neta Crawford
Perspectives on Politics, March 2009, Pages 103-124

Abstract:
Much theorizing about world politics and many policy recommendations are predicated on a rather thin view of homo politicus, often assuming that humans are rational and self-interested strategic actors and that force is the ultima ratio of politics. This thin notion should be replaced by a richer understanding of homo politicus that includes the characteristic activities of political actors: we fight, we feel, we talk, and we build institutions. This understanding helps illuminate the scope and limits of strategic action, argument and persuasion in world politics in both empirical and normative senses. I describe the spectrum of political action that situates the role of argument and persuasion within the extremes of brute force on one side and mutual communication on the other. I also discuss barriers to argument and communication. Noting the role of argument in this spectrum of international and domestic political practice suggests that it is argument (nearly) all the way down and that the scope of argument can be and in some cases has increased over the longue durée. Coercion, by itself, has a limited role in world politics. The claim that there are distinctive logics of argumentation, strategic action, or appropriateness misses the point. Argument is the glue of politics — its characteristic practice. Understanding politics as argumentation has radical empirical and
normative implications for the study and practice of politics.

----------------------

The laughter of the 1962 Tanganyika ‘laughter epidemic’

Christian Hempelmann
Humor – International Journal of Humor Research, February 2007, Pages 49–71

Abstract:
The present article discusses the role of laughter in the much cited ‘laughter epidemic’ that occurred in Tanganyika in 1962. Despite its extraordinary nature, the veracity of the event is confirmed, crucially on
the basis of similar reports. But most current representations are flawed by their exaggeration and misinterpretation of the role of laughter in the event, relating it to a humorous stimulus, a virus or environmental contaminant, or identifying it as contagious laughter. It is argued that the event is a motor-variant case of mass psychogenic illness of which laughter is one common symptom. Therefore it cannot serve as support for other arguments in humor research.

----------------------


Essential conditions for evolution of communication within a species

Alexander Feigel
Journal of Theoretical Biology, 21 October 2008, Pages 768-774

Abstract:
A major obstacle in analyzing the evolution of information exchange and processing is our insufficient understanding of the underlying signaling and decision-making biological mechanisms. For instance, it is unclear why are humans unique in developing such extensive communication abilities. To treat this problem, a method based on the mutual information approach is developed that evaluates the information content of communication between interacting individuals through correlations of their behavior patterns (rather than calculating the information load of exchanged discrete signals, e.g. Shannon entropy). It predicts that correlated interactions of the indirect reciprocity type together with affective behavior and selection rules changing with time are necessary conditions for the emergence of significant information exchange. Population size variations accelerate this development. These results are supported by evidence of demographic bottlenecks, distinguishing human from other species’ (e.g. apes) evolution line. They indicate as well new pathways for evolution of information based phenomena, such as intelligence and complexity.
(ED: These conditions do not appear to have been met in the state of Rhode Island. Communication there is nearly impossible!)

_____________________________________

When Sweet Talk Sours: The Evil Eye in Rivalry

Tanya Menon & Oliver Sheldon
University of Chicago Working Paper, January 2008

Abstract:
Friendly gestures (e.g. flattery, positive affect, praise) typically earn good will. However, drawing from anthropological research on the “evil eye”, we suggest that people are wary of friendly gestures, especially when rivals initiate them. In Study 1, neither Botswanans nor Americans credited friendly rivals for their overtures. In Study 2, the more negotiators exhibited kindness to rivalry-primed counterparts, the less those
counterparts trusted them. In Study 3, friendly rivals provoked more superstitious learning (“jinx” attributions, avoidance, and contamination fears) than hostile rivals. We argue that friendly gestures backfire because they violate people’s predictable schemas about how rivalry should proceed. In Study 4, people reliant on schemas (those making fast judgments versus careful judgments) viewed rivals negatively regardless of the gestures they conveyed. Study 5 literally cast the “evil eye” upon participants by placing them in a room with photos of friendly or hostile eyes gazing at them. Schema-reliant people (those with high need for closure) were most likely to scapegoat friendly rivals.

----------------------

Avoiding the sharp tongue: Anticipated written messages promote fair
economic exchange

Erte Xiao & Daniel Houser
Journal of Economic Psychology, forthcoming

Abstract:
Research in economics and psychology has established that informal non-monetary sanctions, particularly expressions of negative emotion or disapproval, can enforce fair economic exchange. However, scholars are only beginning to understand the reasons non-monetary sanctions affect economic outcomes. Here we provide evidence that a preference to avoid written expression of disapproval, or negative emotion, plays an important role in promoting fair decision making. We study one-shot Dictator games where one subject has the right to determine a division of an amount of money between herself and her receiver. In relation to the standard game, we find significantly fewer earning-maximizing decisions when receivers can react to
offers with ex post written messages. We further find that credible threats of monetary sanctions, while economically inefficient, are significantly more effective than written messages in deterring selfishness. Our data provide new perspectives on the role of communication in promoting economic efficiency in social environments, and support economic theories of decision incorporating psychological factors such as guilt, shame, and self-deception.


On the "1962 Tanganyika Laughter Epidemic": I have no way of knowing. But I bet the cause was the announcement that the Legislature was going to pass a "Stimulus Package." (Actually, the apparent cause was that some kid at a boarding school told a joke. My second bet: it involved flatulence. Everybody loves flatulence. And passing gas and passing a Stimulus Bill are very similar, and have similar effects. So, I stand vindicated!)

(Nod to Kevin L)

Michael Smerconish, in Philly

Radio host and columnist Michael Smerconish, on the Porkulus.

Excerpt:

About 200 prominent economists, including a dozen Nobel laureates, signed a petition pledging support for the stimulus package. Paul Krugman, himself a Nobel economics winner, has called for an even bigger government footprint than the one the president signed. Treasury Secretary Tim Geithner might have to run TurboTax on his computer, but he also ran the New York Fed. He's no dope.
So it should be easy to believe that Obama and his economic brain trust are poised to steer the country out of recession, right? Not necessarily.
ON THE OTHER side sits the conservative Cato Institute, which recently placed full-page ads in the country's major newspapers to express disagreement with the president's plan.
Among the 200-plus who signed that petition was Michael Munger, chairman of the political-science department at Duke.
Munger, who holds a doctorate in economics, told me the president had mischaracterized the nature of the objections. The issue isn't that the Cato petition signers are simply "philosophically" opposed to government intervention. It's that government intervention doesn't work.
"All we're doing is funding things that were already set up, that would have been done anyway by the state. So the point is not that I think the government has no business. The point is that what they're doing is going to do more harm than good. I find it outrageous that he would misrepresent the position of 400 professional Ph.D. economists," he said.

Like Summers, Krugman, Geithner and the hundreds of economists supporting the stimulus plan, Munger and his allies are impressive. And these competing views leave many Americans stuck in the middle of two opposing "expert" opinions.
When I raised that with Munger, he said stimulus supporters know that the statistical realities don't bear out their case.
"But they're desperate," he said. "They're hoping that by giving some sort of sense of confidence - the idea that someone is in charge - that they can reverse this by giving people a sense of confidence."
Which is starting to remind me of global warming. Loads of experts and a similar number of opinions. On one hand, the Intergovernmental Panel on Climate Change deemed it "unequivocal" and "very likely" that global warming, if it truly exists, is spurred by human activity.
Meanwhile, Weather Channel founder John Coleman has called it "the greatest scam in history." Once again, the rest of us are stuck somewhere in the middle, unsure of whom to believe.

My own view: There is a LOT more evidence that there is global warming than there is that Porkulus will work. Porkulus is just faith-based economics married to political entrepreneurship.

The Onion: Disturbingly Prophetic

Wow. Wowie Wowie Wow.

Three Questions, and My Answers.....

(This should be up at REASON later today. I'll post the link. But, for now, an exclusive to KPC readers!) (UPDATE: Link here! Warning: Don't click on the link, in comments, that Naga Sadow put up. It's an obnoxious RickRoll. On the other hand, if you have never been RickRolled, go for it. You'll have to kill your browser process to get out, though)...

1. Outside of the obvious pork and special interest goodies, what are the biggest problems you see with the stimulus package?

The creation of new bureaucratic and regulatory structures, restrictions on creation of liquidity. The genius of the American system, for all its flaws, has been that we can mobilize LOTS of liquidity quickly. Silicon Valley exists because you could sit down, make a pitch, and get $10 million that afternoon.

If we start governing finance like we govern universities, or city councils, we are going to lose that. Having committees, and a bunch of forms to sign off on, and stamps.....Hernando de Soto wrote about systems like this. They strangle business, investment, and growth.

2. Is there anything in the stimulus package that you think will work? If so, what?

Keynes said that Y=C+I+G. Borrowing money to raise "G" (government spending) will work, I suppose. But the cost to future generations is enormous. I am amazed by the hypocrisy of both sides. John McCain calls the stimulus "intergenerational theft." Well, he's right, but he came LATE to this wisdom. The Republicans have been just pouring out new deficit spending since 2002.

And then Obama says he doesn't want to do tired old ideas, and failed economics. But he is doing EXACTLY what the Republicans did: huge deficit-financed spending on largely useless or irrelevant programs designed to reward political friends. The only thing that's different is the identity of the "friends."

So, some of the spending may increase measured GDP slightly for 2009. But the price is increased inflationary pressures in 2010, and the squandering of the birthright of our children for decades.

3. Obama says that doing nothing is not an option. Do you agree with that?

This makes me furious. Doing nothing is NOT an option, anymore. Because first Pres. Bush, and now Pres. Obama, have engaged in a completely irresponsible fear campaign. "We must do something, or you should cower in helpless fear, behind locked doors, in darkened rooms!" Presidents should not use this kind of fear as a weapon to pass their pet projects. Roosevelt, for all his flaws, got it right: "The only thing we have to fear is fear itself." Well, not quite right: it turns out we need to fear fear itself, and also Pres. Obama.

The sensible thing to do at this point would be to make an offer, at 40 cents on the dollar, for the "toxic" assets, both the collaterlized debt obligations packaged by Freddy and Fannie, and also the credit default swap "insurance" derivatives sold by AIG (and some other firms, but mostly AIG). Since AIG wrote so many "naked" CDSs, even for people who don't own the underlying, or "insured" asset, they are going to keep hemorrhaging until someone puts a floor on the value of the assets.

So, a one-time, take it or leave it, offer. One big reason that credit markets are frozen is the uncertainty created by Treasury indecision and vagueness. Asset owners are holding out for a better price, and they are trying to negotiate through the Senate, not the Treasury. Obama needs to lead here, and say, "Take this partial buyout, or hang on to the asset at your peril. There is no better deal coming tomorrow."

The Mayor Updates Us on "Shovel Ready": Digging Up Roads and FIlling Them Back Up Again

The Mayor writes, after going to a meeting of state and county officials on how to suck down money from the Obama "shovel ready" gravy train.

In order to meet the "shovel ready in 90 days" rule, the only projects that can be considered are those for which the environmental assessments and the engineering are done. Almost all of those will already have some or most of their funding in place. Today, for example, our metropolitan planning organization met because we had until 5:00 p.m. to get a project on the Obama list. We chose one that has a combination of federal, county, and local funding. One of the rules is that the new money cannot replace existing federal money. But local money can be replaced. In our case, the county was going to bond for about $4.5 million in order to take a $13 million project to bid. The bond would be paid for over time from a 1/4 cent sales tax the voters approved--it is bringing in about $1 million a year. If we get the Obama money, the county will not bond. Thus, the stimulus money produces no new jobs in our county. It just saves the County Council from having to borrow. The county will not bond, federal cash will replace the county money, and we can count the project as contributing to the stimulus.

At the state level expect to see lots of lane miles of road improved--that is, the asphalt chewed up by a big machine and laid back down as road base. New asphalt is then put on top of the base. No environmental work needs to be done for existing roads so we should see states improving miles of road that do not need to be replaced because those projects are shovel ready--they can go out for bid in a few weeks. Sounds like digging holes and filling them back up--the perfect Keynesian solution.

An epiphany

You are all familiar with Andy Warhol's famous prediction.

It just struck me that the Obama promise is an extension. No one should go bankrupt, and bad business decisions should be paid for by taxpayers, with government guaranteeing against "risk." No one should have to bear the responsibility for bad choices, stupid investments, or lack of planning. But, everyone should live beyond their means, and spend more than they make.

In short:

IN THE FUTURE, EVERYONE WILL BE BANKRUPT FOR FIFTEEN MINUTES....

Will Comes Up Big

Will W is en fuego*, in quite a number of recent posts. I liked this find, but they are all good. (The comments in this thread are entertaining....)

(*Yeah, I know. Sue Dan Patrick)

My Chance to Share My Wisdom

Or, maybe not wisdom. But my views, in any case.

The good folk at JLF, and particularly George Leef, hooked me up with this interview.

Excerpt:

Leef: President Obama and his circle of advisers are all well-educated people, yet they support economic policies that seem to be deeply flawed. Would you say that they simply haven’t read the right books and taken the right courses to comprehend what’s going on, or is the problem that politicians sometimes pursue objectives other than long-run prosperity for the general public?

Munger: President Obama is no worse than George Bush, and he actually may be quite a bit better. George Bush is the one who ran the huge deficits, and who allowed enormous discretionary spending increases and increases in domestic regulation.

The problem is this: It’s hard to claim credit for the vitality of the market. Politicians claim credit for DOING things.

Imagine you had a six-year-old daughter, and that she has a high fever. It’s 1820, and we don’t understand germs or fevers very well. You call the doctor, and the doctor comes to the house. “Please, do something. DO SOMETHING, and help my daughter,” you say.

The doctor takes out a lancet, and makes a small incision in your daughter’s wrist. The theory was that the fever was in the blood itself, and “bleeding” was the only treatment that people in 1820 knew.

It doesn’t work. Your daughter’s fever is still very high. So, you tell the doctor, “DO SOMETHING! You are the doctor.”

The doctor bleeds her some more. And she dies.

And the next day you blame the doctor for not bleeding her MORE and SOONER. But bleeding was the wrong thing to do.

This stimulus is the wrong thing to do. The fact that the first round didn’t work leads me to think we need to stop! But all the desperate economic parents out there say, DO IT MORE! DO IT LONGER! DO IT FAST!

I don’t blame the President. I blame voters, who have the naïve idea that government is responsible for the economy.

Obama's Secret Plan

I am a regular Thursday guest on the Bill LuMaye show, on WPTF. Every Thursday, 5-6 pm.

Yesterday we had a caller who pointed out that Barack Obama apparently has a secret, but highly effective, plan to balance the federal budget, and to finance even the huge Porkulus bill, all without increasing the deficit.

The plan?

Appoint, one after another, all the rich liberals in the country who think spending tax dollars is cool, but that actually PAYING taxes is for chumps.

It's a beauty solution. Consider.

1. None of the people Obama hangs with appear to have paid taxes in decades. They make tons of money, though.
2. Appointing them forces these tax cheats to come out and admit their wicked ways, and to pay their back taxes.
3. Then, they don't actually get appointed, b/c they are too embarrassed. The office stays vacant.
4. So, Obama can appoint ANOTHER tax cheat to the same office, and the cycle begins again.
5. The revenue rolls in, so Nancy Pelosi can use the money to finance birth control conselling for pet hamsters, digitizing veterinary records, and other important things.

I humbly thank that caller. A fundamental insight into the mind of Obama.