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Monday, November 29, 2010
How can Fareed Zakaria write "It is not that the stimulus did not work" if all that spending didn't accomplish its objective, (per Zakaria), "to get the private sector spending again"?
Me thinks Zakaria confuses 'spending' with 'stimulus'... the federal government certainly did the first, it hasn't accomplished the second. And while I'm at it, let me add Martin Feldstein to the list of people who just don't get it, for his (in my view) silly argument that the government can raise taxes "without reducing the incentive to work, to save or to expand businesses".. just as long as it isn't 'tax rates' that are being raised. Increasing taxes sucks money out of the private sector... and this is true no matter what form the tax hike takes or on who the taxes increases are levied. And while people are motivated in large part by the percentage of their income they get to keep 'after taxes', the amount of income they get in the first place is largely determined by the amount of money circulating in the private sector. Suck enough money out of the economy and those whose pockets hold less money are going to be less willing and able to spend and save... those who own businesses are going to be less willing and able to expand their businesses. Put another way, getting to keep 100% of every dollar of income isn't much of a boost if there is less of the revenue that feeds the bottom line. Saturday, November 27, 2010
Washington Post real estate writer Kenneth Harney gets all excited about the new FTC rules that ban 'mortgage modification' companies from taking upfront payments from customers... but my guess is that he is wasting his breath, as few people will actually be helped by this.
If Harney is probably right that a good chunk of these firms are "criminal enterprises posing as do-gooders who promise to get you out of the mortgage jam you're in", then why does he think they're going to refrain from breaking yet another law? And why does he think that people who are dumb enough to hand over their money in advance are going to know or learn about the new law? Or that, even if they do learn of the law (perhaps by reading Harney's column?), that they won't be dumb enough to fall for whatever line the scammer gives them about why the law doesn't apply in their particular circumstances? This new law reminds me of the similar emotions that accompany the passing of so-called 'hate crimes' laws. Someone who is demented enough to string someone up because of the victim's sex or race or sexual preference isn't going to care in the least that he is subject to additional penalties. The same thing holds true for gun control laws... it is ridiculous to think that someone robbing a bank or the neighborhood drug dealer is going to not carry a gun because he is subject to a longer prison term. The pro-government types feel good about themselves when they pass laws such as this, they think they're accomplishing something when in reality they're doing no such thing. Tuesday, November 23, 2010
Contrary to the thrust of this story, homeowners such as this are not 'hidden victims' of the mortgage crisis...
Yes, she has been paying her mortgage... and yes, she can't sell her house for as much as she would like. But 'victim' is not the word to describe people whose misfortune is in some part the result of their own actions. You're not a victim if the injuries you suffer in a car crash come about because you were drunk while behind the wheel... or because you didn't buckle your seat belt. And you're not a victim if you refuse to get out of harm's way when you have the opportunity. As for the 'victims' of the housing crisis... You're not a victim of the mortgage crisis if you went out and bought a house anytime in the past handful of years. A big reason housing prices have fallen so much is because prices were bid up so high to begin with... and everybody who bought a house during this time frame helped bid up prices to that precipitously high level. Sure, this woman only bought as much house as she thought she could afford... but being able to afford something isn't the same thing as saying the item is fairly valued. And you're not a victim if you had passed on the opportunity to sell your house at a great price anytime within the past handful of years. Anyone who chose not to sell their house when prices were higher made their own bed, and it isn't right to label them a victim when their calculations go sour. Wednesday, November 17, 2010
Newsweek (what little is left of it) argues that GM's upcoming IPO proves wrong those who argued against GM's government bailout...
Let me respond: * It is interesting that the liberal Newsweek takes the position that the end justifies the means. In the future, will we see Newsweek arguing that saving American lives justified torturing terrorists for information?. * In trying to counter Texas Governor Rick Perry's argument that the bailout didn't 'necessarily save jobs', the author positions then-President Bush saying the bailout was necessary to save jobs. As with my first point, their relying on Bush is rather inconsistent as Newsweek has rarely before, if ever, viewed Bush as an authority on anything. * The bailout providing a benefit to some (politically connected) groups doesn't prove that we as a country benefited. Given how unpopular the bailouts were, it isn't a stretch to argue that the negative impacts elsewhere in the economy more than offset whatever positive benefits may have resulted from the GM bailout. * The author compares GM today to what 'could have happened', and picks a decidedly negative scenario to make that comparison, ignoring other potential - less negative - alternatives to the government bailout. * The author doesn't address that criticism was directed not only at the money that was given and loaned to GM, but also at the way the government ignored established bankruptcy procedures and the Obama Administration giving preferential treatment to its labor union allies. * In seeking to bolster his argument, the author cites Buick as being the fastest growing brand.... but so what, its sales are less than 15% of overall GM sales. He also reports GM as being profitable... but without mentioning that much of the profit is due to GM not having to fully account for its pension liabilities. And he glosses over the inconvenient fact that despite the supposed positive reaction to GM's new cars, GM's market share is still slipping. * His argument basically comes down to that the bailout should be viewed as a success because of the upcoming IPO. Yet, even after the IPO, GM will still be in hock to the government. Getting some portion of our money back doesn't mean the 'investment' (as the author prefers to re-characterize the bailout) has been a good investment... any more than some of Bernie Madoff's victims getting a portion of their money back means it was wise for them to have given Madoff their money. UPDATE: it turns out, for all the hype, the IPO is priced so low that the government is losing $9 billion on the sale of these initial shares. So tell me again, how does selling shares for less money than was paid prove that the bailout was a good idea? Monday, November 15, 2010
Is rooting for sports teams (other than ones on which you or a member of your family plays) a sign of mental illness?
Given that I can't think of a logical reason anyone would invest so much energy and emotion and spend so much money cheering for a bunch of strangers who are playing a game (and picking a particular team to root for primarily based on where the team plays its games?), I think the answer has to be yes. One has to be crazy to cry when 'their team' loses, and just as crazy to get as excited as they do when 'their team' wins. The fans don't benefit in any tangible way when 'their team' wins any more than they lose something of value when 'their team' loses. In fact, one has to be crazy and delusional to refer to 'their team' in terms of 'us' and 'we'. One has to be crazy to spend as much time as they do arguing about which team is better than another, or which player is overpaid or should be benched, or which coach should be fired. In fact, society as a group has to be crazy to spend as much money watching sports as we do to allow the owners and players to make as much money as they do. (mind you, I'm not saying it isn't right for players to get as much of the pot as they do, I'm saying it isn't right that the pot is as big as it is). It shouldn't be that grown men and women care so much about whether one group of players wins a game or whether they lose. It shouldn't be that the players are elevated to such levels as they are (someone can hit a baseball or dunk a basketball and that makes him a celebrity? Really?). It shouldn't be that thousands of people around the country are paid to report and cover the games being played or that there are as many media outlets which exist solely to cover sports. It's fine to watch games for the entertainment value; watching people crash into one another can be entertaining. But that is pretty much where it should stop. Normal people don't riot after seeing a movie that really entertained them, how does one explain fans rioting after 'their team' wins, if not than by saying they're crazy? And just as normal people don't show up at a movie looking like one of the characters, doesn't one have to be a tad crazy showing up to a game dressed like one of the players?
Washington Post house liberal EJ Dionne calls for the lame duck Congress to pass yet another round of campaign finance law, repeal DADT, give amnesty to millions of illegal immigrants, extend unemployment benefits yet again and suck billions of dollars out of the economy by raising taxes on some of the most productive workers and businesses.
What wonderful advice... from someone who obviously doesn't care a whit about giving the American people what they say they want... namely, programs to get the economy going again. In the immediate aftermath of an election in which Democrats were pummeled for the poor economy, only a complete fool - which Dionne certainly qualifies as - would argue for pushing an agenda such as Dionne's. Where are the steps to unfreeze the labor market? To encourage employers to start hiring? To let people know it is okay to start spending again? Not a single one of Dionne's recommendations is likely to give the public a nice warm feeling that the economy is starting to get back on track... which is why the Democrats would be foolish to pursue such steps... and why I hope they do. EJ Dionne is the liberal gift that keeps giving... to Republicans. Wednesday, November 10, 2010
I see the argument over congressional earmarks as coming down to two issues: should Congress specify that money be used in a certain manner, and if so, how and when should Congress go about doing so?
Knowing that I will annoy the anti-earmark crowd, it is silly to think that the answer to the first question could be anything other than 'yes'. It is nonsensical to think that the founders intended for Congress to be only able to authorize a lump sum of spending and leave it completely to the President's discretion on how to spend those funds, something along the lines of 'here's a pot of money, spend it however you want'. At the very least, Congress has to be able to specify that a certain amount of money be spent on, for example, defense... and another chunk of money on transportation... and another chunk of money on education programs... and so on. Thus, the real issue comes down to the second question: how Congress should express its desire that a certain amount of money be spent in a certain way. Let's start by looking at how specific Congress could/should be in designating funding be used in a particular way. Should Congress merely approve a given amount to be spent on national defense and let the President decide how to spend it among the services? Or does Congress get to allocate a specific amount of money for the Air Force and the Marines? Who gets to decide on how much money is used on manpower and how much used to procure weapons? Should Congress just authorize a certain amount of money to be spent on 'the arts' and let the President decide how to allocate that pot among the various constituencies clamoring for money? What about funding for transportation, should Congress be able to designate that a given amount be spent on rail versus highway? Or does the President get to decide? I don't have a clear answer as to where the line gets drawn, but I recognize that it has to be somewhere in the middle of the spectrum, as neither extreme makes sense. I'd also add that Congress should also be as transparent as possible in making these allocations. There should be no secret insertions of designated spending at the last minute, nor should the authorization be worded in a way that disguises its use. And there should also be a minimum spending requirement. While this seems counter to fiscal sanity (do you really want Congress to have an incentive to spend more?), if a certain project doesn't meet a given threshold, it isn't important enough to warrant Congressional designation as a 'must spend'. Instituting a threshold of, say, $5 million, would eliminate scores of current earmarks that are in the tens and hundreds of thousands of dollars. Monday, November 08, 2010
I can't think of any better way to respond to Obama's claim that the culprit behind the lousy mid-term election results (lousy from his and the Democrats' perspective) was his failure to better communicate to the American public all the great things he has done for us than to quote Obama himself, and from just two short years ago... when commenting on the McCain/Palin platform, he said:
"You can put lipstick on a pig"... "It's still a pig". And... as Obama goes about trying to repackage his accomplishments, I suggest we again think of Obama and his words of wisdom from just a couple of years ago... "You can wrap an old fish in a piece of paper called change. It's still gonna stink". Friday, November 05, 2010
Sticking with Obama's car in a ditch metaphor...
Obama can blame poor messaging all he wants, but I don't know if there is anyone who possesses the oratorical skill needed to convince the public that the best way to get the car out of a ditch was to disconnect three spark plugs, deflate two of the tires and throw a thousand pounds of junk into the trunk. And is it really a surprise that, having seen the Democrats totally trash the car in the ditch, the voters really weren't comfortable leaving the Democrats in charge of getting the car out? Thursday, November 04, 2010
If the patient doesn't believe the treatment is going to work, the treatment isn't going to work.
That holds true in medicine... and it holds true in economics. If the public doesn't buy into a particular course of action, the economy isn't going to get any better. And the public didn't believe Obama was taking the right steps to make things better. And why did they feel this way? Well, in part, because as Obama himself put it, he didn't do a particularly good job of convincing the public that he was on the right track. But the bigger reason is because the people recognized that what Obama and the Democrats were doing were in fact destructive. The public didn't see leaders taking steps to improve confidence... the public saw Obama and Pelosi and Reid doing the exact opposite, making people more fearful. Obama could have taken a month of Sundays and never convinced people that bailouts and Obamacare and raising taxes and crucifying businesses was the medicine the economy needed to get better. Let's give the public some credit for recognizing the turkey for what it was. Who in their right mind would have thought that any of that was going to motivate businesses to start hiring people? Or get people to start spending more money? The answer? No one. Yes, Obama and his fellow Democrats did a lousy job of selling their programs... but they also had a lousy product. And that is the biggest reason why the economy didn't get better... and why the voters took out their frustration on the Democrats on Tuesday.
Not seeing the forest for the trees, George Will writes that Tuesday's vote was a "recoil against liberalism".
Well, it was... but only in an indirect way. The voters whose votes mattered the most on Tuesday were those who comprise the mushy middle, voters who are neither hard-core liberal or conservative and thus are not particular wedded to a particular political philosophy. They also don't pay as much attention to - or care about - the specifics of what goes on in Washington as do the political junkies. To them, issues such as whether one party is using procedural tricks to move legislation, whether bills are posted online, the number of earmarks and so on are just noise in the background. What they care about - and what George Will and the rest of the inside Beltway folks miss - is whether they feel their life is getting better. Do they feel their job is secure? Do they feel they have enough money to pay for the things they want? Do they feel safe from attack, both from terrorists and the common criminal? Do they think their house is appreciating in value? When these folks feel secure, they reward the party in power... regardless of what that party has done and regardless of the way they went about doing it. And when they don't feel safe and secure, as is the case today, they punish the party in power... and not because of what that party did or didn't do. They didn't vote against the Democrats because of the size of the stimulus... or because the Democrats played dirty to pass Obamacare... or because the Democrats bailed out General Motors and the Wall Street banks... at least they didn't so directly. They voted against the Democrats because things aren't going the way the mushy middle wants. Put another way, these voters don't care about the specifics, they're very much the epitome of a bottom line oriented voter. If you're in charge and things are going okay, I'll vote to keep you in office. And if you're in charge and things aren't going so well, then they don't really care about what it is that you've done or not done, they'll vote in favor of someone else. Of course, the reason the economy isn't doing well is because the Democrats did what they did. It is because the Democrats pushed through their stimulus and Obamacare and their anti-business regulations and threats to raise taxes that the economy hasn't fully recovered. So, as I said, in a way, George Will is right... but he also missed the real picture. Wednesday, November 03, 2010
Obama continues to peddle the line that the sluggish economy recovery diminished what would otherwise have been voter appreciation for what Obama has done.
He just doesn't understand and/or won't admit that the sluggish recovery is a direct result of his policies. It is because - and not despite - of what he has done that businesses are not hiring and consumers are not spending. Had he not pushed through a trillion dollar stimulus and a trillion dollar takeover of health care and not hammered businesses in just about every other speech and not done his best to raise taxes on as many people as he could... well, then, the economy would have been much further along the path to recovery. And this is why the GOP can't - and shouldn't - compromise with him. His policies have been terrible for the country... and compromising with him is somewhat akin to agreeing with someone who's been punching you that he won't hit you as many times.. when the solution is to not let him hit you at all. If raising taxes is not a good idea, then it isn't okay to just not raise them as much as Obama wants. If passing lots of new job-killing regulations and mandates isn't a good idea, then it isn't okay to just not pass as many.
Post-election mind dump....
The thumping Christine O'Connell took yesterday provides a sobering lesson for anyone who thinks Sarah Palin should be the GOP nominee in 2012. It doesn't matter what your position is on the issues if the mushy middle think you're a flake. Along those lines, the Tea Party really needs to check out the baggage before deciding to back a candidate. There are plenty of people with the right views on the issues... so why go with someone who brings as much baggage as O'Connell, Miller and Angle? The voters were, as the liberals complained, throwing a temper tantrum. A completely understandable temper tantrum, but a tantrum nonetheless. Things aren't going well, the Democrats were in charge and the public took out their frustration on the people in charge (except of course, for the bluest of districts, where liberal voters somehow managed to blame the impotent GOP for the fact that things weren't going well). And this is to be expected, the public wants to be able to blame somebody when things don't go as well as they want. Yesterday proved my point that you can't win without the mushy middle. There aren't enough conservative voters to win with just that bloc, a candidate needs to win a majority of the so-called independent/moderate bloc to have a chance. And you can't win the mushy middle with candidates they perceive to be flakes. The GOP doesn't need to compromise with Obama... but only if they can succeed in portraying Obama as fixated on continuing the policies that haven't fixed the economy. The public doesn't want bipartisanship per se, rather they somehow think things will improve if there is bipartisanship. This gives the GOP an opening to obstruct Obama. They can't appear to be picking a fight for the sake of picking a fight, they have to come across as refusing to let Obama continue doing things that are harmful to the economy. For example, the GOP doesn't have to accept a temporary extension of all the tax cuts, they can argue that only a complete and permanent extension will provide the necessary boost in consumer and business confidence (something along the lines of 'what business is going to hire a new worker today if they know they're going to have to fire them in the not too distant future?'). More later... Monday, November 01, 2010
Obama acknowledges he should have said 'opponents' instead of 'enemies' to describe those on the other side of the ideological aisle.
I guess Obama's original comment is a twist of sorts of Kinsley's definition of a gaffe, someone saying the truth by accident. For to Obama, we are not merely opponents, conservatives are the enemy... and Obama called it like he sees it. And as Boehner says, this is troubling, Obama using the word to describe conservatives yet unwilling to use it to describe those who are trying to kill us.
There's perhaps no better indication of how out of touch (i.e., delusional) Washington Post columnist and liberal shill EJ Dionne is than this quote: " ...how moderate Obama's program actually is".
If 'moderate' is loosely defined by being 'in the middle', one has to truly be on the fringe (as Dionne is) to even think that an agenda that is opposed by a majority of the country (Obamacare, stimulus, TARP, etc.) is within shouting distance of 'moderate'?
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